Thurcroft Power Ltd v Volta Energy Group Ltd
| Jurisdiction | England & Wales |
| Judge | Cawson |
| Judgment Date | 18 February 2022 |
| Neutral Citation | [2022] EWHC 338 (Comm) |
| Docket Number | Case No: CC-2020-MAN-000025 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 338 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
CIRCUIT COMMERCIAL COURT (QB)
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 0DJ
His Honour Judge Cawson QC
Sitting as a Judge of the High Court
Case No: CC-2020-MAN-000025
Chris de Beneducci (instructed by Horwich Farrelly Limited) for the Claimant
Michael d'Arcy (instructed by Squire Patton Boggs (UK) LLP) for the Defendant
Hearing dates: 18–21 January 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.
HHJ Cawson QC
| CONTENTS | Para. No. |
| Introduction | 1 |
| Key individuals and entities | 5 |
| Battery storage facilities | 6 |
| The history of the Thurcroft Project | 22 |
| Issues to be determined | 110 |
| The witnesses | 112 |
| Agreements | 121 |
| Introduction | 121 |
| Legal principles | 124 |
| The Revised Side Letter and the Transfer Letter | 129 |
| The Option Agreement | 134 |
| Unjust enrichment | 149 |
| Introduction | 149 |
| TPL's case in unjust enrichment | 152 |
| Enrichment? | 152 |
| At TPL's expense? | 162 |
| Was the enrichment unjust? | 165 |
| Defences available to Volta | 177 |
| Conclusion re. TBL's case as to unjust enrichment | 181 |
| Volta's defence as to case on unjust enrichment | |
| Legal principles | 182 |
| Basis of Volta's defence | 182 |
| Determination of unjust enrichment issue | 188 |
| Context of the Option Agreement | 203 |
| Elements of the unjust enrichment claim | 211 |
| Enrichment | 212 |
| At TBL's expense | 221 |
| Unjust factor | 225 |
| Defences | 234 |
| Valuation of benefit | 238 |
| Conclusion in respect undue enrichment claim | 244 |
| The alleged breach of implied terms | 245 |
| TBL's case | 245 |
| Volta's defence | 255 |
| Determination of implied terms issue | 259 |
| Overall conclusion | 267 |
Introduction
In the present proceedings, the Claimant claims that the Defendant is liable to it in consequence of the Defendant having been unjustly enriched at the Claimant's expense and/or having acted in breach of implied contractual terms.
In short, it is the Claimant's case that:
i) Against the background of the grant by the Claimant to the Defendant of an option to purchase (at a price of £800,000 (subject to variation)) an asset related to a project concerning the development of a battery storage facility, and before the exercise of the option, the Claimant transferred the assets to the Defendant, or at least permitted the Defendant to use the same;
ii) Following the expiration of the period for exercising the option, and without the option having been exercised, the Defendant sold or otherwise dealt with the assets the subject matters of the option agreement without accounting in any way to the Claimant in respect of the proceeds of sale received;
iii) The assets were transferred to the Defendant, or the Defendant was permitted to use the assets, on the basis that the Defendant's right to retain and deal with the same was conditional upon the payment of a “success fee” equivalent to the option price if the Defendant proceeded with the relevant project, by building out itself or otherwise in any way;
iv) The Defendant has been unjustly enriched upon the failure of the basis;
v) Further or in the alternative, the Defendant has acted in breach of an implied term of the option agreement that, after the expiry of the option period, it would cease to make use of any asset or assets which it had been using during the course of the option period for the purposes of facilitating the project that the option agreement was intended to facilitate, and that if it did make use of any such assets in order to proceed with the relevant project, after the expiry of the option period, by building out or otherwise, it would become liable to pay the price provided for by the option agreement.
The Defendant submits that the claim is misconceived and without merit:
i) In respect of the unjust enrichment claim, not least because the assets in question were either never the subject matter of the option agreement, or if they were, the Defendant never conferred any benefit in respect of them on the Defendant, and in any event the basis or condition contended for never existed; and
ii) In respect of the breach of contract claim, because there is no proper basis for implying the alleged implied terms as they are theoretical given that the situations in which they could apply do not arise, and in any event, they are neither necessary nor obvious terms to imply.
The Claimant was represented by Mr Chris de Beneducci of Counsel, and the Defendant by Mr Michael d'Arcy of Counsel. I am grateful to them both for their helpful written and oral submissions.
Key individuals and entities
The following individuals and entities are of particular relevance for the purposes of the present claim:
i) Andrew Brown (“ Mr Brown”): At all material times, sole director of and shareholder in AB Energy Agency Co Limited (“ ABE”), a company which specialises in finding potential construction sites for battery storage projects and in applying to distribution network operators for grid connections. Mr Brown was TPL's sole witness.
ii) Kenneth Smithers (“ Mr Smithers”): From 22 September 2017 onwards (and prior to 31 March 2017), a director (with his wife) of, and shareholder in Tiger Energy Management Limited (“ TEM”), a company (now known as Newton Energi Limited) which specialises in making applications for planning permission in the energy sector and in identifying investors for battery storage projects.
iii) Anthony and Julie Green (“ the Greens”): The freehold owners of land at Green Lane, Thurcroft, Rotherham S66 9JD (“ the Thurcroft Site”).
iv) The Claimant, Thurcroft Power Limited (“ TPL”): A company incorporated on 28 July 2017 as a special purpose vehicle for the purpose of undertaking the initial stages of a battery storage project at the Thurcroft Site (“ the Thurcroft Project”). Mr Brown was appointed as a director of TPL on incorporation. ABE and TEM were appointed as corporate directors of TPL on 14 August 2017. TEM resigned as a director of TPL on 16 February 2018. Following incorporation, 20 shares of £1 each held by Mr Brown, and 10 shares of £1 each were held by Clare Black. 30 shares of £1 each were allotted to TEM on or about 14 August 2017.
v) The Defendant, Volta Energy Group Limited (“ Volta”): A company incorporated on 25 July 2017 to deliver battery storage sites, and a subsidiary of Effective Energy Group Limited.
vi) Don Leiper (“ Mr Leiper”): At all material times, acted as Volta's Managing Director, albeit not formally appointed as a director of Volta. Now Chief Operating Officer for Alta Capital Limited, but still engaged as a consultant to Volta. Witness for Volta.
vii) Shaun Adams (“ Mr Adams”): At all material times, Chief Financial Officer of Effective Energy Group Limited and Volta, and a director of Effective Energy Group Limited. Witness for Volta.
viii) Julian Windmill (“ Mr Windmill”): At all material times, a short-term contractor to Volta, who assisted with project administration on the Thurcroft Project.
ix) Howard Kirke (“ Mr Kirke”): Commercial Engineer at Northern Powergrid (Yorkshire) plc (“ NPG”), the relevant distribution network.
x) Max Jones (“ Mr Jones”): an architectural technologist, and a director and founder of Max Design Consultancy Limited (“ MDC”), an architectural planning and consultancy firm engaged to prepare and submit a planning application in respect of the Thurcroft Project. Witness for Volta.
Battery storage facilities
Central to the present case is a project intended to lead to the development of a battery storage facility on the Thurcroft Site. Before considering the background to the present dispute, it is necessary to understand what the development of a battery storage facility involves.
In essence, battery storage facilities are a collection of high-power, high-capacity batteries, which are used to store electrical energy taken from the National Grid that can be released back to the latter.
There are two principal purposes for battery storage facilities, namely:
i) The acquisition of electricity from the National Grid when the supply of electricity exceeds demand, and the supply of electricity to the National Grid when demand for electricity exceeds supply; and
ii) The stabilisation (or regulation) of frequency so as to ensure that the 50Hz frequency of the electricity in the National Grid remains within the required tolerance.
A battery storage facility can potentially generate income through three revenue streams, namely:
i) Providing frequency stabilisation services;
ii) Providing a reliable source of power by guaranteeing capacity in the event of a shortfall of generation capacity, thereby ensuring that there is enough energy to meet customer demands on the National Grid; and
iii) Purchasing energy to charge the facility's batteries at the lowest possible cost in order to be able to release the energy back to the National Grid to meet demand at peak times when the energy cost is at its most expensive thereby profiting from the differential price charging.
So far as providing frequency stabilisation...
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