Fine Lady Bakeries Ltd v EDF Energy Customers Ltd (Formerly EDF Energy Customers Plc)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Farbey |
| Judgment Date | 24 January 2020 |
| Neutral Citation | [2020] EWHC 87 (QB) |
| Date | 24 January 2020 |
| Docket Number | Case No: D90MA176 |
| Court | Queen's Bench Division |
[2020] EWHC 87 (QB)
Mrs Justice Farbey
Case No: D90MA176
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
M60 9DJ
Tom Mountford (instructed by DLA Piper UK LLP) for the Appellant
Gerard Rothschild (instructed by Dentons UK and Middle East LLP) for the First Respondent
Michael Watkins (instructed by Pinsent Masons LLP for the Second Respondent
Hearing date: 17 October 2019
Approved Judgment
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 is an appeal, brought with the permission of O'Farrell J, against two orders of Deputy District Judge Masheder sitting at the Manchester District Registry on 11 February 2019. In one order, the DDJ allowed the application of EDF Energy Customers Ltd (the first defendant below and the first respondent in this appeal; hereafter “EDF”) for summary judgment against Fine Lady Bakeries Ltd (the claimant below and the appellant in this appeal; hereafter “the claimant”). In the second order, the judge allowed the summary judgment application of E.ON UK Energy Services Ltd (the second defendant below and the second respondent in this appeal; hereafter “EON”) against Fine Lady Bakeries. As a result, the claimant's claims against EDF and EON were dismissed. A counterclaim by EDF against the claimant was allowed.
Before me, as below, Mr Tom Mountford appeared for the claimant; Mr Gerard Rothschild appeared for EDF; Mr Michael Watkins appeared for EON. I am grateful to counsel for their helpful submissions.
The grounds of appeal are numerous but fall into three principal categories. First, it is submitted that the judge made a serious procedural error because his judgment incorporated the defendants' skeleton arguments to an impermissible degree. Secondly, the judge failed to recognise that the claims against EDF and EON were not suitable for summary determination. Thirdly, the judge failed to consider the claimant's argument that there was some other compelling reason for trial on account of the complexity of the issues, their interaction with the regulatory framework governing the supply of electricity to consumers, and their potentially wide significance in the energy market. Other, specific grounds of appeal raised in relation to EDF are (in summary) that the judge was wrong to interpret the contractual documents as meaning that EDF had no liability to the claimant and was wrong in concluding that exclusion clauses on which EDF relied were reasonable under sections 3 and 11 of the Unfair Contract Terms Act 1977. The judge was wrong to conclude that the claimant's claim for unjust enrichment must fail. In relation to EON, the grounds of appeal maintain that the judge misinterpreted the exclusion clause on which EON relied and erred in concluding that the clause was reasonable under the 1977 Act.
Factual background
The claimant, which was set up in Banbury, supplies bakery products to supermarkets, wholesalers and the sandwich manufacturing industry. Over the course of 2009–2010, the claimant built a new production site in Manchester including the construction of a substation that was needed to supply electricity to the site. The principal period with which the claim is concerned begins in September 2010 and ends in July 2014. During that period, EDF (one of the so-called Big 6 energy companies operating in the United Kingdom) supplied electricity to the Manchester site. The contractual relations between the claimant and EDF were governed by a series of supply agreements.
The EDF contracts
On 28 October 2010, the claimant contracted for the supply of electricity for a minimum period of six months at a forecasted cost of £250,775.97. That first supply agreement was made on EDF's written standard terms for industrial and commercial business customers (version 1.0 dated 15 March 2010). A copy of the first supply agreement and the standard terms was before the judge and is before me. In around April 2011, the claimant and EDF entered into a second agreement, again on EDF's written standard terms, for the continuation of the supply of electricity for a minimum period of six months with a forecasted cost of £337,439.05. That second supply agreement was before the judge and is before me. Version 2.0 of the standard terms and conditions came into effect on 2 June 2011. A copy was before the judge and is before me.
On 16 August 2011, the claimant and EDF entered into contractual arrangements for the continued supply of electricity on written special conditions. In the event of any conflict between the special conditions and the standard terms and conditions, the former were to prevail. I have seen a copy of the special conditions which show that the earliest termination date was 30 September 2024 and which are said by EDF and EON to be bespoke. Neither the judge nor this court has seen a third set of standard terms and conditions, and there is no evidence of a fresh forecasted cost.
The EON contracts
On 18 June 2010, the claimant had signed a Meter Operation Agreement with EON for the installation and maintenance of an electricity meter for the Manchester site, in consideration of an annual payment of £309. According to the documents before me, the meter was installed by an EON engineer on about 26 August 2010. The engineer configured the meter so that its current transformer (CT) ratio was 800/5. That was wrong: the ratio ought to have been 400/5. The CT ratio determines the amount of electricity recorded by the meter as having been used. According to the claimant, the EON meter erroneously recorded twice the volume of electricity supplied to the claimant by EDF.
A third party (on EON's case) thereafter collected data from the meter annually and had the task of performing a visual safety check. The incorrect CT ratio was not identified until 16 July 2014 when EON (or more accurately a successor company to the second respondent which for present purposes I need not describe) informed EDF of the misconfiguration and reconfigured the meter to the correct CT ratio. The same inspection revealed that the meter had never been commissioned (the purpose of Commissioning being to ensure that the energy flowing across a defined metering point is accurately recorded by the meter). The meter at the Manchester site was commissioned only after the 2014 inspection which thereafter led (indisputably) to accurate meter readings.
The parties' statements of case
The claimant's case, put simply, is that the errors as to CT ratio and commissioning caused it to be overcharged by EDF for electricity that it did not consume. The total overcharge is said to be £1,643,129. Following a partial refund by EDF and by ENW (the relevant distribution network operator which had received an onward payment from EDF), the remaining overpayment is said to be £748,696.
By a claim form issued on 17 July 2017, the claimant sought to recover the remaining overpayment from the defendants. In relation to EDF, the Particulars of Claim raise two causes of action: breach of contract and a claim in unjust enrichment for the recovery of payments made under mistake. As regards breach of contract, the claimant's case is that, on the proper interpretation of the material parts of the contractual documents, EDF was obliged to charge for electricity that was actually consumed as opposed to electricity recorded as consumed by the meter.
The Particulars of Claim rely also on what are said to be implied contractual terms. In particular, the claimant contends that certain of EDF's regulatory obligations – particularly under what is known as the “Balancing and Settlement Code” (hereafter “the BSC”) — give rise to implied obligations under contract. I shall return to the BSC and to the more general regulatory framework below.
As regards the claim against EDF in unjust enrichment, the Particulars of Claim contend that overpayments were made as a result of mistaken consumption figures and that EDF had been unjustly enriched as a result.
In relation to EON, the claim is breach of contract. The Particulars of Claim state that, in breach of the Meter Operation Agreement, EON failed to install or commission the meter properly; but the claimant contends that EDF is also legally responsible for the failures of EON “on account of the relationship of agency between EDF and EON under the applicable regulatory framework”. The pleaded breaches of contract against EON were therefore also advanced as breaches by EDF through EON as its agent under the BSC.
EDF filed a Defence on or around 11 September 2017 in which it admitted that the invoiced sums were not calculated by reference to the claimant's actual consumption of electricity but denied any breach of contract because (in very short terms) the invoices were properly raised in accordance with the meter readings. EDF was under no duty to reconcile the sums charged against actual consumption. The BSC was of no relevance to the claim because it concerns responsibilities as between the parties to the BSC only.
The claim of unjust enrichment was denied on the basis that the claimant had not made any overpayments to EDF and no mistake had been made: EDF had invoiced the claimant in accordance with the relevant contractual terms and the claimant had made payments in accordance with its contractual duties. EDF denied any unjust factor. It claimed in addition that the claimant was estopped from claiming that EDF had been unjustly enriched...
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