The High Court ruled on 22 July 2026 that the Environment Agency has power under section 37(1) of the Environment Act 1995 to prosecute common law conspiracy to defraud, refusing a judicial review challenge by the former Southern Water chief executive in a case involving alleged avoided penalties of around £45 million.
TL;DR · LAST REVIEWED 22 July 2026
- In R (Wright) v Medway Magistrates' Court [2026] EWHC 1842 (Admin), a Divisional Court refused permission for judicial review of a summons charging the former Southern Water chief executive and three senior managers with conspiracy to defraud.
- The court held that section 37(1) of the Environment Act 1995 lets the Environment Agency prosecute any offence where, in its opinion, the prosecution is calculated to facilitate, or is conducive or incidental to, carrying out its functions.
- The court rejected both extremes: the EA is not a general prosecutor free of the incidental test, but nor is it limited to statutory environmental offences.
- The EA alleges deliberate manipulation of the Operator Self-Monitoring regime for wastewater, including contriving no-flow results, avoiding penalties the company itself assessed at around £45 million; the allegations have not been tested at trial.
- The court also set aside the claimant's anonymity order: once a person is charged, the general rule is that there is no reasonable expectation of privacy, and open justice requires full reporting.
- The court found a serious breach of the claimant's duty of candour in how the anonymity order was obtained, with a lesser breach by the EA.
R (Wright) v Medway Magistrates' Court at a glance
| Citation | [2026] EWHC 1842 (Admin) | Divisional Court, King's Bench Division, Administrative Court |
| Judges | Popplewell LJ and Hilliard J | Judgment handed down 22 July 2026 |
| Claimant | Former chief executive of Southern Water Services Ltd | Challenge to the EA's power to institute the prosecution |
| Charge | Conspiracy to defraud at common law | Preserved by section 5(2) Criminal Law Act 1977; maximum 10 years |
| Key provision | Section 37(1) Environment Act 1995 | Incidental general functions, including power to institute criminal proceedings |
| Outcome | Permission for judicial review refused | EA power confirmed; anonymity order set aside; criminal case continues |
Source: Approved judgment, The National Archives Find Case Law, 22 July 2026
KEY FACTS
- Case: R (on the application of Matthew Wright) v Medway Magistrates' Court [2026] EWHC 1842 (Admin), Lord Justice Popplewell and Mr Justice Hilliard, handed down 22 July 2026
- Decision: permission to apply for judicial review refused; the Environment Agency has power to prosecute conspiracy to defraud where incidental to its functions
- Charge: common law conspiracy to defraud, maximum sentence 10 years, summons issued by Medway Magistrates' Court in September 2025
- Alleged scale: avoided penalties of around £45 million on the company's own assessment, with the EA assessing the figure as higher; allegations untested at trial
- Anonymity: order set aside; the judgment states there is no reasonable expectation of privacy once a person has been charged
Criminal proceedings in this case are active. The charge described in this article is an allegation which has not been tested at trial, and every defendant is presumed innocent unless and until proven guilty. This article reports the High Court's published judgment on the Environment Agency's prosecution powers and does not suggest any outcome in the criminal proceedings.
What did the High Court decide about the Environment Agency
The Divisional Court refused permission for judicial review, holding that section 37(1) of the Environment Act 1995 empowers the Environment Agency to prosecute any offence, including common law conspiracy to defraud, where in its opinion the prosecution is incidental to carrying out its functions.
The challenge was brought by the former chief executive of Southern Water Services Ltd after Medway Magistrates' Court issued a summons charging him and three senior managers with conspiracy to defraud at common law. His case was not that the charge itself was inappropriate: the judgment records that no argument was advanced that the Crown Prosecution Service or Serious Fraud Office could not properly have brought it. The sole question was whether the Environment Agency, as a statutory body, had the power to institute the proceedings itself. Lord Justice Popplewell, with whom Mr Justice Hilliard agreed, concluded that it did, describing the conclusion as reached without any real hesitation and the contrary argument as unarguable. The court held that the closing words of section 37(1), which state that the Agency may institute criminal proceedings in England and Wales, are tied to the incidental functions test in the rest of the section: the EA may prosecute any offence of any nature where, in its opinion, the prosecution is calculated to facilitate, or is conducive or incidental to, the carrying out of any of its functions. Prosecuting alleged fraud aimed at manipulating the regulatory system it administers plainly met that test.
What is alleged in the Southern Water prosecution
The EA alleges a deliberate plan to manipulate the Operator Self-Monitoring regime for wastewater by contriving no-flow conditions at treatment works so sites could not fail permit tests, avoiding penalties the company itself assessed at around £45 million; the allegations are untested at trial.
Wastewater treatment works operate under environmental permits, and under the Operator Self-Monitoring regime the permit holder samples and tests its own final treated effluent, reporting results to the EA, which also passes them to Ofwat for use in price setting and performance penalties. Built into the regime was a no-flow provision: if flow was insufficient at the random testing time, the sample was not treated as a fail and no further sample was taken that period. The EA alleges that officers of the company deliberately contrived operational circumstances to produce no-flow results at times when sites were believed likely to fail, including, on the alleged facts summarised in the judgment, arranging for wastewater to be removed from facilities by tankers, with a view to concealing pollution and deceiving the regulators. On the company's own assessment the avoided penalties were of the order of £45 million, and on the EA's assessment higher. The judgment records these as allegations of very serious criminal misconduct which remain to be tried; nothing in the ruling determines whether any of them is true. Separately, and as a matter of court record, the company itself previously pleaded guilty in Operation Garden to 51 pollution offences relating to almost 7,000 individual discharges.
What does section 37 of the Environment Act 1995 actually allow
The court steered between two extremes: section 37(1) does not make the EA a general prosecutor able to charge any offence unconditionally, but nor is it confined to statutory environmental offences; the single test is whether the prosecution is incidental to the EA's functions.
The EA's primary argument, that the closing words of section 37(1) confer an unlimited power to prosecute any offence, was rejected. The EA is a creature of statute, and unlike the body considered in R v Rollins, which was an ordinary company with the private prosecution rights of any legal person, its power to prosecute exists only to the extent section 37 confers it. The section's heading, Incidental general functions, and the conjunctive drafting tie the prosecution power to the incidental test. But the claimant's narrower reading fared no better. The court held there is no warrant for reading in restrictions confining the power to statutory offences, to environmental legislation, or to substantive rather than inchoate offences such as conspiracy. The judgment works through the anomalies that reading would produce: the EA could prosecute a person who dumped toxic waste, but not a group who agreed to do so if the plan was thwarted; it could not prosecute criminal damage to flood defences, or a ransom cyber-attack on its own systems. The provision traces back to section 4 of the Water Resources Act 1991, where the equivalent power of the National Rivers Authority was expressly tied to its functions, and the court held the 1995 restructuring reflected Scottish prosecutorial arrangements rather than any intention to widen the power.
Why did the court refuse anonymity
Because the claimant has been charged: the judgment applies the established rule that once a person is charged with a criminal offence there is no reasonable expectation of privacy, and open justice requires that the public can know who the principal actors in court proceedings are.
An anonymity order had been granted in November 2025, pending the judicial review, under which the claimant was referred to by a cypher and reporting of his identity was restricted. The Divisional Court set it aside. Applying the line of authority running through Khuja, ZXC v Bloomberg and Marandi, the court held that restrictions on open justice must be truly exceptional and strictly necessary, established by clear and cogent evidence, and that where a person has been charged the general rule is that article 8 privacy rights are not even engaged. The court added a further reason specific to this case: suppressing the identity would invite public speculation that the EA had not charged the former chief executive through timidity, incompetence or want of evidence, when the only issue raised was a point of statutory power. The judgment also found a serious breach of the claimant's duty of candour in obtaining the original order: the court had been left under the impression that an imminent hearing made the application urgent when the hearing had in fact been adjourned, a development neither side reported promptly, with the primary blame placed on the claimant's side and a lesser breach found against the EA.
What does the ruling mean for regulated businesses
The ruling confirms that a statutory regulator with a section 37 style incidental power can itself bring fraud and conspiracy charges against companies and individual executives where the alleged dishonesty targets its regulatory system, without routing the case through the CPS or SFO.
The immediate effect is on the water sector, where the EA regulates environmental permits and the self-monitoring regime sits at the centre of compliance, but the reasoning reaches further. The court's construction means the deliberate manipulation of a regulatory reporting system can be charged by the regulator itself as common law conspiracy to defraud, an offence carrying up to 10 years, rather than only as regulatory offences carrying far lower penalties. The judgment also notes that prosecution is conducive to recovering the benefits of criminality through confiscation orders under the Proceeds of Crime Act 2002 and compensation orders, which places personal financial exposure alongside corporate fines. For senior individuals, two further points stand out. First, the court treated prosecuting individuals for alleged fraud on the regulatory system as plainly incidental to the EA's functions of preventing pollution and deterring others, a formulation that applies regardless of seniority. Second, the anonymity ruling means executives charged in such cases should expect to be named: the judgment holds that a high profile role in a major public utility diminishes rather than strengthens the expectation of privacy in relation to the company's affairs. The criminal proceedings themselves continue in the ordinary way, and the ruling decides nothing about the strength or truth of the allegations.
RELATED GUIDES
DISCLAIMER
This article is for general information only and does not constitute legal advice. It reports a published High Court judgment on a question of statutory power. The criminal allegations referred to are untested and all defendants are presumed innocent unless and until proven guilty.
Frequently asked questions
Can the Environment Agency prosecute for fraud
Yes. The High Court held in [2026] EWHC 1842 (Admin) that section 37(1) of the Environment Act 1995 allows the EA to prosecute any offence, including common law conspiracy to defraud, where in its opinion the prosecution is calculated to facilitate, or is conducive or incidental to, carrying out its functions.
What is conspiracy to defraud
A common law offence, preserved by section 5(2) of the Criminal Law Act 1977, of agreeing dishonestly to deprive a person of something or to injure a proprietary right, carrying a maximum sentence of 10 years. Its use is subject to guidelines published by the Attorney General.
What is the Operator Self-Monitoring regime for wastewater
A permit-based system under which wastewater companies sample and test their own treated effluent and report the results to the Environment Agency, which shares them with Ofwat. Failed tests can amount to permit breaches and trigger financial penalties in price setting.
Why was the claimant's anonymity refused
The judgment applies the established rule that once a person has been charged with a criminal offence there is generally no reasonable expectation of privacy, and holds that open justice required full reporting of the challenge, including the claimant's identity.
Does the ruling decide whether the allegations are true
No. The ruling decides only that the Environment Agency has the statutory power to bring the prosecution. The allegations remain untested, the criminal proceedings continue separately, and all defendants are presumed innocent unless and until proven guilty.
SOURCES
- R (Wright) v Medway Magistrates' Court [2026] EWHC 1842 (Admin), approved judgment – accessed 22 July 2026
- Environment Act 1995, section 37, legislation.gov.uk – accessed 22 July 2026
- Environment Agency, GOV.UK – accessed 22 July 2026
