Expert Tooling and Automation Ltd v Engie Power Ltd
| Jurisdiction | England & Wales |
| Judge | Saffman |
| Judgment Date | 26 March 2024 |
| Neutral Citation | [2024] EWHC 374 (Ch) |
| Year | 2024 |
| Court | Chancery Division |
| Docket Number | Case No: BL-2024-LDS-000003 |
[2024] EWHC 374 (Ch)
His Honour Judge Saffman sitting as a Judge of the High Court
Case No: BL-2024-LDS-000003
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT
BUSINESS LIST (Ch)
LEEDS DISTRICT REGISTRY
The Court House Oxford Row Leeds LS1 3BG
Mr Stephen Brown (instructed by BC Legal) for the Claimant
Mr David Lord KC and Mr Stuart Cutting (instructed by Walker Morris) for the Defendant
Hearing date: 6 & 7 February 2024
Date draft circulated to the Parties 15 February 2024
Date handed down: 26 March 2024
I direct that, pursuant to CPR PD 39A para 6.1, no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.
Introduction
The claimant, Expert Tooling and Automation Limited, now and at all times relevant to this claim, carried on business as a manufacturer of tools, related equipment and special purpose machinery. It did so from a variety of industrial sites both in the Midlands and in the North East. In this claim it is represented by Mr Stephen Brown of counsel.
Inevitably, the manufacturing process requires the consumption of significant amounts of energy. This case concerns 5 contracts that the claimant entered into with the defendant, a supplier of electricity, by which the defendant supplied electricity to the claimant's premises in the North East. The defendant is represented by Mr David Lord KC and Mr Stuart Cutting of counsel.
As it had done in relation to prior energy supply contracts, the claimant used the services of Utilitywise plc (UW) an energy broker in order to secure the 5 contracts with which I am concerned. UW entered into administration on 13 February 2019 and was dissolved on 19 May 2022. It is, of course, not a party to this claim.
UW held itself out to customers as an expert in the procurement of energy. Its website boasted that it would, “ negotiate with your energy supplier on your behalf” and that it was, “ renowned for negotiating contracts at the most opportune points in the market”. It claimed to be, “ helping businesses save time, save effort and save money since 2006” and to have, “ significant buying power, which we use to help our customers find better deals and save money”. UW expressly stated that, “ We are independent and on your side”.
Through the brokerage of UW the claimant committed itself to the 5 contracts, all of which provided for the claimant to pay for its electricity on the basis of an agreed price per kilowatt hour (kWh) of consumption. There was one unit price per kWh of consumption during the day and a lower unit price for consumption at night. It is not suggested that this charging structure per se was unusual. The relationship between UW and the defendant was governed by brokerage agreements and side letters to which I shall come.
It transpires that the unit price charged to the claimant pursuant to each contract included a sum that was paid by the defendant to UW by way of commission for introducing the claimant to the defendant. That commission varied in respect of each of the 5 contracts and, at least in connection with the first 3 in time of the 5 contracts, that commission was at the rate proposed by UW. This supplement to the base unit charge had the effect of increasing the aggregate unit charge per kWh by a significant percentage ranging from 31% in respect of the first of the 5 contracts to 9% in respect of the last.
Suffice it to say that it is agreed that, had the contracts run their course without the intervening insolvency of UW, UW would have received from the defendant by way of commission the sum of £130,449.70. In simple terms and ignoring any issue relating to the rate that, in reality, the claimant could have negotiated with the defendant if it had conducted negotiations direct rather than through an intermediary, the claimant asserts that it paid an excess charge of £130,449.70 for its electricity in the period covered by the contracts.
It is conceded by the claimant that it was aware that UW would be paid a commission for brokering the contracts. It is conceded by the defendant that the claimant was not told of the level of commission. The defendant asserts that the claimant was notified that the commission payable to UW would be funded by a supplement added to the unit cost that was equal to the commission payments. The claimant denies that this was its understanding.
By this claim the claimant looks to the defendant for the commission element of its electricity bills. It does so on the basis that it was an accessory to UW's breach of its obligations to the claimant. It seeks equitable compensation in that amount or, alternatively, payment for monies had and received.
In order for the claim to succeed the claimant must establish first, that UW did indeed breach the obligations that it owed to the claimant and secondly that, in law, the defendant was an accessory to those breaches.
It is conceded that UW was the claimant's agent. The claimant asserts that this is a case where the agency was a fiduciary one importing obligations of trust, confidence and single minded loyalty on the part of UW in its dealings with the claimant. The scope of which included the obligation not to put itself in a position where its interests conflicted with those of the claimant. It is contended by the claimant that the commission structure was such that a conflict of interest was inevitable because UW's duty to obtain the best deal for the claimant inevitably conflicted with its own interest in maximising its commission.
The defendant denies that, in the circumstances of this case, UW owed fiduciary duties in the strict sense. Even if it did however, it had the informed consent of the claimant to the commission structure. The claimant disputes that.
All this leads to a consideration of the duties on an agent who has disclosed to his principal the fact that he is earning a commission but has not disclosed what that commission is. This is the concept of the half secret commission to which I shall come in more detail later.
In any event, the defendant asserts that, even if it is established that UW breached its fiduciary obligations, the claimant has failed to establish that the criteria are met for fixing that liability on the defendant as an accessory to the breach.
The claim however is not founded exclusively on agency/fiduciary obligations. It is also asserted by the claimant that there were terms to be implied into the contract between it and UW that UW would act in good faith and in the claimant's best interests and the defendant induced a breach of that contract. The defendant denies that, in law it induced a breach.
There are 2 further issues with which I am concerned. The first is a limitation point. The first contract with which I am concerned was dated 8 February 2016. This claim was brought on 31 March 2022, some 6 years and 7 weeks later.
The defendant contends it is caught by s5 Limitation Act 1980 in respect of the claim for money had and received and/or by the exception to the provision in s36 of the 1980 Act by which claims for equitable relief are not subject to a limitation period.
The claimant does not accept that the claim is caught by either s5 or the s36 exception but even if it is, there was deliberate concealment of the cause of action and the claimant can therefore rely on s32 of the 1980 Act with the effect that the claim is in time.
This contract is by far the greatest in value. It provided for the defendant to supply electricity at a unit cost that included 5.6p per kWh by way of commission to UW for a period of 5 years from 1 April 2016 to 31 March 2021. The value to UW was just short of £101,000 in commission.
The 4 remaining contracts were each for 6 months. Each was entered within the 6 years of the bringing of proceedings. The second contract dated 17 May 2016 took effect from 1 April 2021 until 30 September 2021. The third contract was dated 28 November 2016 to take effect for 6 months from the day after the second contract expired. Contracts 4 and 5 respectively dated 9 November 2017 and 30 November 2017 were designed to take effect for 6 months each to provide an uninterrupted electricity supply up to 31 March 2023. The commission to be earned by UW from these 4 contracts was respectively £11,863.57, £9,582.12, £4,631.74 and £3,466.30. The commission on the latter 2 contracts was much less than on the first 3 because they were governed by a cap that the defendant placed on commission payable to brokers of 3p/kWh ostensibly to put an end to the “ champagne 1 i” commission that brokers had enjoyed hitherto. I should add that it is interesting to note that contracts 2 to 5 were dated many years before their respective start dates.
The second issue relates to quantum. The claimant's assessment of the claim at £130,449.71 is based on the aggregate kWh of electricity consumed over the period covered by the 5 contracts multiplied by that element of the unit price in each contract that reflected UW's commission. In short, it is the amount of commission paid by the claimant.
In fact, by reason of the insolvency of UW and various adjustments in terms of accounting between UW and the defendant, the amount of commission actually paid to UW by the defendant was £108,511.29. The defendant argues that if the claim is made out and commission has to be repaid it cannot exceed the commission it actually paid. The dispute therefore is whether compensation is assessed on what the claimant paid to the...
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