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Toucan Energy Holdings Ltd v Wirsol Energy Ltd

Judgment Cited authorities 44 Cited in 6 Precedent Map Related
Vincent
JurisdictionEngland & Wales
JudgeMr Justice Henshaw
Judgment Date14 April 2021
Neutral Citation[2021] EWHC 895 (Comm)
Date14 April 2021
Docket NumberCase No: CL-2018-000640
CourtQueen's Bench Division (Commercial Court)

[2021] EWHC 895 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Rolls Building, Fetter Lane,

London, EC4A 1NL

Before:

THE HONOURABLE Mr Justice Henshaw

Case No: CL-2018-000640

Between:
(1) Toucan Energy Holdings Limited
(2) Toucan Gen Co Limited
Claimants
and
(1) Wirsol Energy Limited
(2) Wircon UK Solar Assets GmbH
(3) Wircon GmbH
Defendants

Stephen Cogley QC, Samuel Townend and Sophia Hurst (instructed by Stewarts Law LLP) for the Claimants

Craig Morrison, Emily Husain and Jacob Rabinowitz (instructed by Enyo Law LLP) for the Defendants

Hearing dates: 7–8, 12–15, 19–23, 26–30 October and 4–5 November 2020

Draft judgment circulated to the parties on 20 March 2021

Approved Judgment

Mr Justice Henshaw

(A) INTRODUCTION

7

(B) FACTUAL BACKGROUND

8

(1) The parties

8

(2) Original acquisition and construction of the solar parks

9

(a) The EPC Contracts and O&M Agreements

9

(b) Financing by BLB

9

(c) Design and construction of the solar parks

10

(3) Negotiation and execution of the SPAs and ALE Contract

11

(a) Negotiation of the SPAs

11

(b) Negotiations and entry into the ALE Contract

12

(4) Taking Over of the solar parks and performance in 2017

12

(a) Issuing the Taking Over Certificates

12

(b) Performance in 2017

13

(5) Performance under the ALE Contract

14

(a) Initial steps

14

(b) Waiver of CS49

14

(c) Procurement of asset life extensions

14

(d) Events after December 2017

15

(6) Development of a dispute regarding the solar parks

16

(7) Legal proceedings

17

(a) The ALE Claim

17

(b) The Claimants' refinancing

17

(c) The Claimants' claims

17

(d) The conclusion of Wirsol's summary judgment application

18

(e) Further procedural steps

19

(8) Brief summary of the components of a solar park

19

(C) OVERVIEW OF CLAIMS

21

(D) WITNESSES

21

(1) Claimants' witnesses of fact

21

(2) Defendants' witnesses of fact

23

(3) Experts

23

(E) DEFECTS: OVERVIEW OF CLAIMS AND CONTRACTUAL SCHEME

24

(1) Overview of claims

24

(2) The EPC Contractual Scheme

25

(3) The O&M Agreements scheme

26

(F) CAPACITY DEFECTS AND PROTECTION SETTINGS (Scott Schedule Items 1 and 3)

26

(1) Introduction

26

(2) Contractual obligations

29

(3) Maximum load curve

34

(4) Relevant combinations of voltage and power factor

48

(5) Voltage variations and use of transformer taps

55

(6) Transformer ratings

60

(a) General

60

(b) SEA transformers

63

(c) GBE transformers

66

(d) Imefy transformer

67

(e) Hammond transformer

68

(7) De-rating for Site Conditions

68

(8) Safety margin/protection settings

70

(9) Conclusions in relation to busbar capacity

72

(10) Conclusions in relation to transformer capacity

72

(11) Remedy

73

(12) Postscript

74

(G) LOSSES CAUSED BY CAPACITY DEFECTS: CAPPING OR ‘CLIPPING’ OF INVERTERS (Scott Schedule Item 2)

75

(1) Introduction

75

(2) Extent of clipping

76

(3) Guaranteed Performance Ratio

78

(4) EPC clause 17.6

78

(a) Scope of clause 17.6

79

(b) Deliberate default

79

(c) Gross negligence

80

(5) Application of EPC clause 17.6

80

(6) Remedy

86

(H) USE OF FORCED AIR COOLED TRANSFORMERS (Scott Schedule Item 4)

92

(1) Whether there was a breach of Employer's Requirements clause 4.4.7

92

(2) Rectification for common mistake

95

(3) Employer's Requirements § 2.1

97

(4) Remedy

102

(I) SUBSTATION HUMIDITY (Scott Schedule Item 5)

102

(1) Introduction and relevant standards

102

(2) Design of the substations

103

(3) Humidity monitoring data

108

(4) Operational experience

113

(a) Cranham transformer failure

117

(b) Corrosion of transformers

118

(c) Voltage transformers (VTs)

122

(d) Microswitches

125

(e) Condensation at cable entries

126

(5) Conclusion on humidity

127

(6) Remedy on humidity

127

(J) INGRESS OF WATER (Scott Schedule Item 6)

127

(K) USE OF PLYWOOD IN SUBSTATIONS (Scott Schedule Item 7)

130

(1) Flammability

130

(2) Durability and water damage

133

(3) Remedy

134

(L) LACK OF HV AND LV CIRCUIT BREAKERS (Scott Schedule Items 8 to 12 and 14)

135

(1) Contractual obligations

136

(2) HV Circuit Breakers (Scott Schedule Item 10)

137

(3) LV circuit breakers (Scott Schedule Item 8)

138

(a) Liability

138

(b) Remedy

142

(4) Bus Section Breakers (Scott Schedule Items 9 and 11)

143

(5) Wilbees Third Circuit Breaker (Scott Schedule Item 12)

144

(6) Combiner box miniature circuit breakers (Scott Schedule Item 14)

145

(M) MONITORING DEFECTS (Scott Schedule Items 15 to 19)

148

(1) Measurement of voltage at string level (Scott Schedule Item 15)

148

(2) Voltage measurement at combiner box (Scott Schedule Item 16)

149

(3) Remote monitoring of transformer temperature (Scott Schedule Item 17)

149

(4) Alarms and alerts (Scott Schedule Item 18)

150

(5) Storage of reactive energy data for 90 days (Scott Schedule Item 19)

151

(6) Remedy

152

(N) INADEQUATE SITE FINISHING AND LANDSCAPING WORKS ((Scott Schedule Item 20)

153

(O) 25 YEAR MINIMUM OPERATIONAL LIFE WARRANTY (Scott Schedule Item 21)

153

(1) Contractual obligations

153

(2) C's case as to Wirsol's design operational life

154

(3) Transformers

154

(4) Forced air cooled transformers, water ingress and excessive humidity

156

(5) Plywood flooring

156

(6) Circuit breakers

157

(P) OTHER ISSUES RELATING TO REMEDY

157

(1) General approach to quantification of loss

157

(2) The Claimants' remedial scheme

158

(3) Replacement of substations

160

(4) The Cranham transformer

169

(5) Other costs of remedial work

169

(a) Downtime while remediation takes place

169

(b) Removal and disposal of transformers, switchgear and containers

170

(c) Disconnection, civils and installation works at final commissioning

171

(d) Specialist screw pile foundations: difference £68,400

171

(e) Insurances

172

(f) Inflation

173

(g) Contingency/ design development costs: difference £29,564

173

(Q) BLIGHT

173

(1) Introduction

173

(2) Principles

174

(3) Factual witnesses' evidence of blight

175

(4) Expert evidence as to existence of blight

176

(5) Inclusion of non-defective sites

182

(6) Quantum of alleged blight

184

(7) Conclusion on blight claims

185

(R) REFINANCING COSTS

185

(1) Causation

185

(2) Quantum of the refinancing claim

194

(a) Basis of assessment

194

(b) The 2018 refinancing: relevant capital sum

194

(c) The 2023 refinancing: interest and fees

197

(d) Discount rate

197

(e) Conclusion as to quantum

197

(3) Title to sue

197

(4) EPC clause 17.6

198

(S) TERMINATION OF EPCS AND O&M CONTRACTS

198

(1) Termination of the EPC Contracts

199

(2) Termination of the O&M Agreements

201

(3) Mitigation of loss

202

(4) Clause 13.4 of the O&M Agreements

207

(T) DELAY LIQUIDATED DAMAGES

207

(1) Introduction

207

(2) Legal principles

208

(3) Representation

208

(4) SPVs' intention or knowledge

211

(5) Reliance

212

(6) Inequitable for Claimants to resile from waiver

213

(U) ABAKUS BYES DELAY LIQUIDATED DAMAGES

213

(1) Background

213

(2) The provisions of the SPA

214

(3) Disclosure by Wircon UK and Wircon Germany

216

(4) Discussion

217

(V) THE OUTWOOD OPTION

219

(1) Background

219

(2) Toucan Gen Co's claims

219

(3) Toucan Gen Co's pleaded case

221

(4) Toucan Gen Co's proposed new case

222

(5) Conclusion on the Outwood Option

223

(W) BREACH OF WARRANTY: DEFECTS

223

(X) THE ALE CLAIMS

226

(1) Introduction

226

(2) Relevant provisions

226

(3) Facts

230

(4) Type of waiver required by § 13 of the ALE Contract

245

(5) Whether Toucan Energy waived CS49 under the ALE Contract

250

(6) Non-disclosure under SPA clause 20.2

258

(7) Other matters concerning the waiver of CS49

259

(8) Implied terms

260

(a) Proposed implied terms

260

(b) Principles

261

(c) Application

261

(9) Whether compliant asset life extensions obtained

264

(a) Use of template

266

(b) Whether BLB consented to the final form option agreement

267

(c) Whether Toucan, acting reasonably, would have consented to the form of option

271

(d) Subsequent changes to the forms of option

278

(e) Adequacy of the alleged written confirmation from the landlord

280

(f) Whether an engrossment form of option was provided to the Claimants

281

(g) Whether a planning extension was achieved

282

(10) Conclusion on ALE Contract claims

284

(Y) ADDITIONAL CLAIMS AGAINST THE SPVS

284

(Z) OVERALL CONCLUSIONS

285

ANNEX – THE DEFENDANTS' APPLICATION TO AMEND

287

(1) Introduction

287

(2) Applicable principles

287

(3) Background

293

(4) Transformer and busbar capacity

295

(5) ‘Capping’ or ‘clipping’ of inverters

301

(6) Adjustments to protection settings

301

(7) HV circuit breakers

303

(8) HV and LV bus section circuit breakers

305

(9) Miniature Circuit Breakers

305

(10) Landscaping

305

(11) Other matters
...

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