Angel Group Ltd v British Gas Trading Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 08 October 2012 |
| Neutral Citation | [2012] EWHC 2702 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 6875 of 2012 |
| Date | 08 October 2012 |
[2012] EWHC 2702 (Ch)
Mr Justice Norris
Case No: 6875 of 2012
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Rolls Building
Fetter Lane
London, EC4A 1NL
Patrick Harty (instructed by The Khan Partnership) for the Claimant
Robert Duddridge (instructed by Moon Beaver) for the Defendant
Hearing dates: 24, 25, 26 September 2012
This application requires me to address the problems that arise when a winding-up petition is presented in relation to the balance due on a running account.
Angel Group Limited ("Angel") is a customer of British Gas Trading Limited ("BG") purchasing electricity and gas for the portfolio of properties which it either owns or leases. Angel has two business models.
First, it provides (under a government contract) accommodation to asylum seekers, housing them in some 2000 properties. For these properties Angel is responsible for the gas and the electricity consumed, and a change in the occupant of the dwelling is therefore irrelevant. But there are two potential areas of difficulty: (a) if the property is void then any charge based on an estimated reading may assume consumption which is not actually taking place; (b) if Angel hands back a leased property for which it no longer has any business need or if it takes one of its own properties out of the scope of the government contract then some other person may become liable to pay for gas and electricity consumed at the premises.
The second business model is a more orthodox private tenant letting operation. Here a change in occupation may result in successive tenants becoming liable for energy consumed at the premises, with Angel only being liable in respect of any void periods. The potential areas for dispute are two: (a) there may be a question whether Angel is liable at all; (b) if Angel is liable because the property is void then estimated bills may again assume greater consumption than that which actually occurs.
Angel ran two separate accounts with BG. The first was the Corporate Account which dated back to 2001 and originally covered the supply of electricity and gas to some private tenant and some asylum-seeker properties: from December 2008 it related only to gas supplies. The terms of business governing this account are to be found in BG's General Conditions version 4. Under Clause 3.2 of those Conditions once the initial Supply Period expires then the supply continues on the same terms and conditions save that the supply price becomes "those charges provided for in the schedule of standby charges… determined from time to time by [BG]"; but each party is entitled to terminate the agreement on giving not less than 28 days notice in writing to the other. BG's contractual right to terminate commercial supply is somewhat illusory. Although the customer is Angel, the actual supply is to domestic premises; and BG cannot simply cut off the energy supply to domestic premises. So Angel enjoys continued supply in circumstances in which other commercial operators would have their supply terminated.
Clause 9.5 of the General Conditions v.4 says that if the information required for charging purposes is not available at any time then BG can make an estimate, and the customer must pay in accordance with the estimate. However clause 9.6 provides that if Angel reasonably believes that it has a dispute over the amount of an invoice then it must notify BG of the dispute within 5 days of receipt of the invoice and must pay "all undisputed amounts in full or 75% of the full amount of the invoice (whichever is the greater) save where [BG] in its sole discretion… agrees to an interim payment of some lesser amount". Clause 20 of the General Conditions contains an "entire agreement" clause and also provides that the agreement can only be varied or amended by the written agreement of both parties.
The second account is the SME Account: in essence this relates to the properties which are occupied by asylum seekers in Yorkshire, Humberside, the North- east of England, and Scotland and which are not covered by the Corporate Account. The supply contract results from two Acceptance Forms which were signed on behalf of Angel on the 16 December 2008. There is a dispute about the terms of the contract. But at this point it is sufficient to note that the Acceptance Form requests the supply of energy for a fixed term and at a fixed price on the General Conditions version 5.
Clause 2.7 of version 5 stipulated that at the end of the initial period of the contract BG would renew it for the period of one year, and that the renewal contract would have the same terms and charges unless BG informed its customer that they had changed and had given 120 days notice of the rate change. Clause 5.2 provided that British Gas could send bills based on actual meter readings or estimated meter readings: but clause 5.4 (c) provided that if Angel disagreed with any amount for which they have been billed they would give reasons for disputing the bill and pay at least 75% of the full amount by the date it was due to be paid. If payment in accordance with that obligation resulted in an overpayment then BG promised to credit the excess charge to Angel's account.
Clause 2.7 (b) provided that either Angel or BG could end the contract at the end of the initial period or of any renewal period by giving 90 days notice. If the contract ended but no new terms had been agreed then the General Conditions version 5 provided that BG would continue to supply energy but at what were (in effect) "standby" rates. Clause 10.2 was an "entire agreement" clause. By clause 10.3 (apart from changes to the charging rate) changes in the supply contract only took effect when put in writing and signed on behalf of both Angel and BG.
The Acceptance Forms were signed and dated on 16 December 2008. But before they were returned to BG there was an e-mail exchange. Angel wrote at 9:15 am on 18 December 2008 asking BG's representative to confirm (amongst other things) "guarantee every bill will have an actual reading" and
"We can cancel a property for either a landlord handback, sale of a property, or a private tenant moving in who is reasonable for paying their own bills. This can also be done at any time i.e if we have not told you for 6 months then you will credit us back."
At 13:03 a representative of BG e-mailed back confirming that "these all apply in our agreement with yourselves". Angel then returned the Acceptance Forms which confirmed that the entire agreement was to be found in the General Conditions and that any prior arrangements were cancelled. It is these events that give rise to the dispute about the terms of the SME supply contract.
BG supplied Angel's properties with energy under these contracts. Each month BG would deliver a statement of and invoices for the energy charges falling due in that month, identifying the property, the invoice number that related to that property, the charge in respect of that property (or the credit due upon an actual reading following of estimate) and the reference of the user. But the complexity of Angel's business operation and the existence of multiple billing sites led to frequent disputes. In October 2008 BG issued County Court proceedings in respect of a sum in excess of £200,000.00 alleged to be due on the Corporate Account (the SME Account not being then in existence). Whilst that defended litigation slowly progressed a further £738,000.00 of alleged arrears accrued in respect of continuing supply on both the Corporate and the new SME Accounts.
Furthermore, the fixed period under the SME Accounts expired, and the question arose what tariff would apply to the renewal period in the light of the existing disputes. In a telephone conversation on 5 July 2010 (of which Angel has a transcript) a representative of BG said "What we were going to look to do is extend the existing prices until the credit issue is resolved". The conversation concluded with this exchange:-
BG: "….the reason we haven't sent the prices through is subject to a credit issue. So if you aren't aware of the credit issue we aren't going to be able to resolve it until you're aware of whatever it is that's holding the job up.
Angel: But in the meantime you're extending the current prices until this is resolved.
BG: Yeah. But the thing is we can't do that long run permanently because obviously those prices you negotiated were very very good rates and we're happy to put you on those prices but we do need to get this resolved.
Angel: Yeah, OK that's fine with me."
The matter was not, however resolved. In September 2010 BG issued a winding up petition against Angel which resulted in an immediate interim payment of £500,000 by Angel to BG and the negotiation of a settlement under which Angel paid a total of £732,000 (again on an interim basis with no sum allocated to any particular account).
Angel continued to make irregular "interim" payments; but by October 2011 BG was alleging a total indebtedness in excess of £1.282 million (of which £490,000 was attributable to the Corporate Account and £792,000 was attributable to the SME Account). Demand for payment of this sum led to a further round of negotiations under which Angel made an interim payment £661,000 to BG in February 2012. In the course of those negotiations the solicitors for BG wrote to Angel's solicitors on 8 December 2011
"For the avoidance of doubt we hereby give your client notice on behalf of [BG] that any agreement to extend the fixed rate pricing entered into on or about 5 July 2010 is hereby terminated with immediate effect and your client is now supplied at [BG's] standby out of contract tariff".
This event has been referred to (without prejudging its legal effect) as "the...
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