A E Beckett and Sons (Lyndons) Ltd and Others v Midlands Electricity Plc
| Jurisdiction | England & Wales |
| Judgment Date | 08 December 2001 |
| Judgment citation (vLex) | [2000] EWCA Civ J1208-4 |
| Docket Number | Case No: A2.2000/0468 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 December 2001 |
[2000] EWCA Civ J1208-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mr Peregrine Simon, Q.C. Sitting as a Deputy Judge
QUEEN'S BENCH DIVISION
The Master of the Rolls
Lord Justice May and
Lord Justice Laws
Case No: A2.2000/0468
Lower Court Reference: 1997 A No. 1817
(By Original Action)
Mr Robert Moxon-Browne QC and Mr Graham Eklund (instructed byBerrymans Lace Mawer for the Claimants)
Mr Justin Fenwick QC and Ms Leigh-Ann Mulcahy (instructed byRowe & Mawfor theRespondent)
LORD PHILLIPS MR:
This is the judgment of the Court.
On the evening of 6 th April 1993 a fire broke out at Lyndon Farm, Poolhead Lane, near Solihull in the West Midlands. Lyndon Farm consisted of two businesses: first, an egg production business located in three large chicken sheds ("the chicken sheds") and associated premises; and second, an adjacent egg-packing and distribution facility ("the egg-packing factory").
Both the chicken sheds and the egg-packing factory were badly damaged by the fire. The first claimant ("Becketts") is the freehold owner of all of Lyndon Farm. The second claimant ("Stonegate") is the owner of the poultry farming business and the lessee of the chicken sheds pursuant to a lease dated 4 th January 199The third claimant ("Primrose") was formed in 1983 as a joint venture between Becketts and Stonegate. It had previously been the operator of the poultry farming business; but from 4 th January 1993, when it became a wholly owned subsidiary of Stonegate, it operated the egg packing and distribution business from the egg-packing factory and was the lessee of those premises.
The fire was electrical in origin. Electricity was supplied to Lyndon Farm by the Defendant, ("Midland") a public electricity supplier under the Electricity Act 1989.
On 25 th February 2000 Mr Peregrine Simon, QC, sitting as a Deputy Judge of the High Court, gave a judgment which determined a number of preliminary issues. He held that the fire was caused by negligence on the part of Midland and that Midland was liable in damages to each of the Claimants. Against that finding there is no appeal. He further held that, so far as Stonegate and Primrose were concerned, Midland's liability for economic loss was excluded by a term of the conditions under which Midland supplied electricity to those companies. This is an appeal against that finding. It raises two issues:
(i) Was the relationship between Midland on the one hand and Stonegate and Primrose on the other subject to a condition which excluded Midland's liability for economic loss? If so
(ii) On its true construction, did the term apply to the economic loss suffered by Stonegate and Primrose in the circumstances of this case?
The Cause of the Fire
The main issue at the trial was where and how the fire started. The Judge held that the fire originated in a meter box that formed part of the installation for the supply of electricity to the egg-packing factory. The meter box was sealed and secured. It and its contents were owned by and under the control of Midland. The cause of the fire was the incorporation of obsolete 'Lucy Oxford' fuses in the system that were not suitable for their purpose and were not installed and maintained so as to prevent danger. The largest part of the claims for damages made by Stonegate and Primrose relate to economic losses alleged to have been suffered as a result of the interruption of their businesses.
The Judge's Finding on Incorporation of the Exclusion Clause
The basis upon which the Judge found that the relationship between Midland and its customers, Stonegate and Primrose, was governed by an exclusion clause appears from the following passages of his judgment:
"As at 6 th April 1993, both Stonegate and Primrose were registered customers of the defendant. The legal relationship between a supplier of electricity and its tariff customer was the subject of analysis in Norweb plc v Dixon [1995] 3 All ER 952 at 959. In that case the Divisional Court described the relationship as statutory rather contractual since legal compulsion, both as to the creation of the relationship and the fixing of terms, was inconsistent with a contract. There is no room for negotiation by either party: the supplier must accept the customer and the customer must accept the supplier.
The Electricity Act 1989 provides:
16 Duty to supply on request
(1) …a public electricity supplier shall, upon being required to do so by the owner or occupier of premises:
(a) give a supply of electricity to those premises; and
(b) so far as may be necessary for that purpose, provide electric lines or electrical plant or both.
(2) Where any person requires a supply of electricity… he shall give… a notice…
(3) Where a public electricity supplier receives from any person a notice under subsection (2) … the supplier shall… give to that person a notice under subsection (4) below.
(4) A notice under this subsection shall—…
(e) specify any other terms which that person will be required to accept under section 21 below…
21 Additional terms of supply
A public electricity supplier may require any person who requires a supply of electricity… to accept in respect of the supply –
(b) any terms restricting any liability of the supplier for economic loss resulting from negligence which it is reasonable in all the circumstances for that person to be required to accept.
The Defendant published Conditions of Supply which included at clause 11:
The Company shall not be liable for economic loss resulting from negligence in respect of the supply.
This was repeated on p.31 of the defendant's booklet of prices for April 1993. According to the statement of Mr Jones (the Insurance Manager of the defendant) this booklet was at all material times included in Tariff Notices sent to customers.
The claimants make two points. First, the machinery of the Act for importing these conditions as a term of supply was not complied with; and, secondly, the exclusion clause was not apt to exclude liability for economic loss resulting from negligence in respect of the installation of plant (as in this case) in contradistinction to the supply of electricity.
As to the first point, it seems clear that the defendant intended its tariff customers to accept a term which restricted the defendant's liability for economic loss resulting from negligence. It was not suggested that this term was unreasonable within the meaning of the Act. If it had, it might have been necessary to look at the general law as to the recoverability of economic loss. Mr Moxon-Browne QC submitted that the defendant did not have to do very much but this it should have done more than it did, without suggesting specifically what should have been done. In my judgment, bearing in mind that the relationship is statutory and that concepts relating to contractual notices are not directly applicable, the defendant did sufficient to bring itself within the protection of the Act and effectively excluded itself from liability for economic loss resulting from negligence."
The following points should be noted in relation to this passage:
(1) The Judge found that an identical term, in the wording of clause 11, was published by Midland both in Conditions of Supply and in a booklet of prices.
(2) The Judge referred to evidence that the booklet of prices was included in tariff notices sent to customers.
(3) The Judge made no finding as to the manner in which Midland published Conditions of Supply.
(4) The Judge did not identify what it was that was done by Midland which he considered 'brought Midland within the protection of the Act and effectively excluded itself from liability for economic loss resulting from negligence'.
It is common ground that the first of these findings does not accurately reflect the evidence.
Mr Jones, Midland's insurance manager, gave evidence of a booklet, setting out Midland's tariffs, which included at page 31 the following clause:
"Midland's Electricity PLC will not be liable for economic loss resulting from negligence."
In his witness statement he stated:
"The booklet also refers, in the introduction on page 4, to our 'Terms and Conditions' applying to our tariffs, i.e. the Conditions of Supply. A copy of the current Conditions of Supply is attached… Clause 11 restates that Midland Electricity shall not be liable for economic loss resulting from negligence in respect of the supply."
Page 4 of the booklet gave the following information about Midland's Terms and Conditions:
"This booklet contains details of all of MEB's published prices. Full terms, conditions and definitions are near the end of this booklet in the section 'DEFINITIONS'.
… MEB have a statutory and legal obligation to publish all available tariffs together with Terms and Conditions which apply to them. Throughout this booklet, therefore, specific details of tariffs will be printed on grey backgrounds similar to this paragraph."
The section in the booklet headed 'DEFINITIONS' included page 31 and the exclusion clause there set out. It did not include the Terms and Conditions of which clause 11 formed part.
Thus there are in this case two different exclusion clauses in play:
(i) 'Midland Electricity PLC will not be liable for economic loss resulting from negligence' I shall call this 'the wide exclusion clause',
(ii) 'The Company shall not be liable for economic loss resulting from negligence in...
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