Langage Energy Park Ltd v EP Langage Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 04 March 2022 |
| Neutral Citation | [2022] EWHC 432 (Ch) |
| Docket Number | Case No: BL-2020-002001 |
| Court | Chancery Division |
[2022] EWHC 432 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Mr Justice Fancourt
Case No: BL-2020-002001
Alexander Polley (instructed by Gowling WLG (UK) LLP) for the Claimant
Justin Mort QC (instructed by Eversheds Sutherland (International) LLP) for the Defendant
Hearing dates: 7–11 February 2022
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.
THE HON. Mr Justice Fancourt
Introduction
The principal issue in this trial is whether the Claimant, by written notice, triggered contingent obligations of the Defendant in a contract made in writing dated 8 January 2008 (“the Contract”). The Contract relates to the development of the Langage Energy Centre (a gas-fired power station) by the Defendant and the adjoining Langage Energy Park by the Claimant or its successors in title.
The Claimant asserts that by letter dated 27 June 2018 from Carlton Power Ltd, its parent company (“the Notice”), the Defendant was given notice in appropriate terms to trigger the obligation to build infrastructure. The Defendant does not dispute the formal validity of the Notice but contends that it was invalid in substance, because the circumstances in which the Claimant was entitled to give notice had not arisen at that time.
The relief sought by the Claimant is a series of declarations about the validity of the Notice and the consequential obligations of the Defendant to build infrastructure.
I heard evidence on behalf of the Claimant company from its director, Mr Michael Benson, who signed the Notice, and expert evidence from Mr Edwin Bergbaum, a chartered engineer with expertise in civil and structural engineering. The Defendant called Mr Mark Barrett, an employee of the Defendant company, and two expert witnesses: Mr William Duncan, a chartered engineer with particular expertise in gas engineering, and Mr David Stillman, a chartered engineer with expertise in mechanical, electrical and plumbing engineering.
Background
The development of the Energy Park was granted outline planning permission in 1999 and an agreement pursuant to s.106 of the Town and Country Planning Act 1990 was made between South Hams District Council (“the Council”) as local planning authority and the Claimant to facilitate the development (“the Energy Park s.106”). The Energy Park s.106 contained planning obligations, including a requirement to pay for and build 30,000 sq ft of “starter units” as managed workspace and/or business start-up and expansion units for businesses in the South Hams District and then grant a 21-year lease of them to the Council at a peppercorn rent.
The development of the Energy Centre was also granted outline planning permission in 1999 and a s.106 agreement was made between the Council, the Defendant (by a former name) and the then owners of the land, which created planning obligations and was subsequently varied in 2005 and 2006. At that time, the Energy Centre land and the Energy Park land were in common control. It was envisaged that the Energy Park could make beneficial use of steam, heat, gas and electricity coming from the Energy Centre.
On 28 November 2000, outline planning permission was granted for 50,000 sq m (about 538,000 sq ft) of land at the Energy Park to be used for office, light industrial, general industrial and warehousing use (B1, B2 and B8 Use Classes). In 2007, the Claimant provided the Defendant (which by that time had been acquired by Centrica) with its estimate of the service media that the Claimant would require for its development. The Defendant responded on 2 August 2007 setting out a short specification of what it was prepared to provide, including two 12MVA electrical circuits from the Energy Centre, a high-pressure gas pipe and pipes for 2MWt of thermal heat at 200degC.
On 9 November 2007, reserved matters approval was granted for 8,893 sq m (95,723 sq ft) of that land to be used for B1 “start up and move on” office accommodation.
Full planning permission for the Energy Centre was not granted until 26 June 2008 and was released by a new s.106 agreement made between the Council and the Defendant dated 26 June 2008 (“the Energy Centre s.106”). The Energy Centre was built and commissioned in about March 2010. The Energy Park did not proceed, doubtless because of the impact of the 2008 banking and financial crisis.
The Co-operation Agreement (“the Contract”)
Shortly before the grant of full planning permission for the Energy Centre, the Claimant and the Defendant signed the Contract, by which they acknowledged and declared that it was intended to establish a framework to facilitate their respective developments and that, subject to the specific provisions of the Contract, each of them would co-operate with the other and act reasonably at all times to assist and facilitate the other's development (cl. 2.1). The Contract was doubtless a consequence of the separation of ownership of the two companies.
Although, by the date of the Contract, the Energy Centre s.106 had not been signed, Schedule 13 to the Contract comprises a draft of the Energy Centre s.106, as it had by then been negotiated (“the draft s.106”). Part 5 of Schedule 3 to the draft s.106 contains obligations on the Defendant to build specified infrastructure for particular services to be supplied to the Claimant's Energy Park. It is in this Part that the contingent obligations of the Defendant that are relevant to this claim are described.
By cl. 5.1 of the Contract, subject to immaterial exceptions, the Defendant agreed to perform:
i) its obligations under the original s.106 agreement relating to the development of the Energy Centre, as subsequently varied; and
ii) its obligations in Part 5 of Schedule 3 to the draft s.106 as if those obligations formed part of the Contract, regardless of whether the draft s.106 was ever executed by the Defendant and the Council.
Under the draft s.106, the Defendant would also be obliged to construct a spine road separating the Energy Centre from the Energy Park and to lay the Service Media (as defined) for the passage or transmission of services to the Energy Park. These obligations were repeated in the Contract, as between the Claimant and the Defendant: Schedule 8 to the Contract is a detailed specification of the Service Media, which later became Schedule 5 to the Energy Centre s.106. This specification includes preliminary works (the provision of ducts) for the particular services in Part 5 of Schedule 3, media for surface water, potable water, sewerage and telecommunications systems and a 180mm pipe from a connection with the Wales and West Utilities medium pressure (MP) gas supply to within 1 metre of the boundary with the Energy Park, to provide up to 12MW of odorised gas at system pressure. By cl. 13.11 of the Contract, the Defendant agreed to build them and the Spine Road.
The Energy Centre s.106 Agreement, when executed, was is in substantially identical terms (so far as material) to the draft s.106.
The Claimant and the Defendant therefore knew at the time that the Contract was made the scope of the Service Media, including the MP gas supply, that the Defendant was going to be obliged to provide in any event.
Part 5 of Schedule 3 to the draft s.106 (“Part 5”) is set out in full as an appendix to this judgment, for convenience. References to “the Applicant” in the draft s.106 are to the Defendant (who was applying for full planning permission for the Energy Centre). I will refer below to the most material provisions.
As to the operation of Part 5, it creates obligations (owed to the Claimant and in due course to the Council) for the Defendant to carry out works in three phases. Phase 1 (para 5.1 and the Service Media works) is the installation of flanges for the connection of hot water pipework on the Energy Centre and ductwork in the Defendant's land to accommodate pipes for hot water, high pressure un-odorised gas (“HP gas”) and electricity cables. The work in Phase 1 is to be carried out prior to the commissioning of the Energy Centre, as part of the Service Media works that the Defendant was to carry out.
Phase 2 (para 5.2 and 5.6) is the installation of pipes for pressurised hot water at 200degC and for HP gas and electrical cables for supplies from the Energy Centre (“the Services”) within the ductwork previously installed in Phase 1, and a heat exchanger on the Energy Centre. This work is contingent on written notice by the Claimant to the Defendant and the Council “that there is or will be a demand … from the occupier[s] of the Qualifying Buildings” for any of the Services. On receipt of notice, the Defendant must install that infrastructure as soon as reasonably practicable.
Phase 3 (para 5.3 and 5.7) is a contingent obligation to supply the Services at reasonable prices. This phase depends on the Defendant having performed the Phase 2 obligations, the Claimant or a developer or owner-occupier having connected the Qualifying Buildings to the Defendant's pipework and plant, and a “lawful occupier” of the Qualifying Buildings themselves notifying the Defendant that they wish to take a supply.
The Qualifying Buildings are defined as the first 50,000 sq m (gross external area) of floorspace constructed as part of the Business Park (which is part of the Energy Park).
Mr Mort QC, who represented the Defendant, argued that Part 5 was to be construed as creating in effect only two phases: the Service Media works to be done as part of the...
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