BUSINESS AND PROPERTY COURTS
COMMERCIAL COURT (QBD)
7 Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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URE ENERGY LIMITED |
Claimant |
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- and - |
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NOTTING HILL GENESIS |
Defendant |
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JAMIE RILEY QC and CHINMAYI SHARMA (instructed by Devonshires Solicitors LLP) for the Defendant
Hearing dates: 29 June and 6 July 2022
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Crown Copyright ©
Mrs Justice Moulder :
i) Mr Andrew Burnette, Partner/Member of Burges Salmon LLP ("Burges Salmon") on behalf of URE (second and third witness statements); and
ii) Mr Gary Ensor who at the material time was the Chief Executive Officer of URE (first and second witness statements).
i) Mr Sandip Shergill, Director of Procurement at NHG;
ii) Mr Nick Haines, founder of Orez Consulting, a renewable energy consultancy company; and
iii) Mr Andrew Cowan, Partner at Devonshires Solicitors LLP ("Devonshires").
Background
Application
i) whether the right to terminate under Clause 10.2(d) arose;
ii) whether the right to terminate was lost either through waiver or estoppel;
iii) the amount of the payment due under Clause 10.5.
Expert evidence
"contrary to Commercial Court Guide Section F8.6, the Defendant's evidence in answer dated 6 June 2022 includes expert evidence for which the Defendant has not obtained the permission of the Court, nor has it provided a justification or explained why expert evidence is reasonably required on the points on which its witnesses give opinion evidence"
"F8.6 Where a party wishes to rely on expert evidence at a hearing other than a trial, the permission of the Court should still be obtained to ensure that expert evidence is only placed before the Court when it is reasonably required to resolve the application, to enable the nature, scope and sequence of any expert evidence to be managed by the court, and to avoid the difficulties which can occur when one party to an application seeks to adduce expert evidence at a late stage or different parties identify different issues on which it may be relevant to consider expert opinion.
F8.7 For the avoidance of doubt, a party relies on expert evidence whenever they put before the Court, so as to invite the Court to take its substance into account when judging the application, evidence of opinion on a matter calling for expertise, whether the opinion is given in writing or orally and whether directly (from the source) or indirectly (as where a solicitor's witness statement reports an opinion communicated to them).
F8.8 In applications on notice, a party wishing to adduce expert evidence, or identifying that another party appears to be relying on expert evidence, should raise the issue with the Court as soon as possible after the application has been issued and served. The question should not be left to be dealt with only when the application is heard or determined on paper, as the case may be." [emphasis added]
Relevant law on summary judgment applications
"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if-
(a) it considers that-
(i) that claimant has no real prospect of succeeding on the claim or issue; or
(ii) that defendant has no real prospect of successfully defending the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
"An application for summary judgment under rule 24.2 may be based on-
(1) a point of law (including a question of construction of a document),
(2) the evidence which can reasonably be expected to be available at trial or the lack of it, or
(3) a combination of these."
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No.5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 3;
vii) On the other hand it is not uncommon for an application under Pt 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
i) The standard of proof required of the respondent is not high. It suffices merely to rebut the applicant's statement of belief.
ii) The court hearing a Part 24 application should be wary of trying issues of fact on evidence where the facts are apparently credible and are to be set against the facts being advanced by the other side. Choosing between them is the function of the trial judge, not the judge on an interim application, unless there is some inherent improbability in what is being asserted or some extraneous evidence which would contradict it;
iii) When deciding whether the respondent has some real prospect of success the court should not apply the standard which would be applicable at the trial, namely the balance of probabilities on the evidence presented.
"8. There is an abundance of recent high authority on the principles applicable to the construction of commercial documents, including Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896; Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101; Re Sigma Finance Corp [2010] 1 All ER 571; Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900; Arnold v Britton [2015] AC 1619; and Wood v Capita Insurance Services Ltd [2017] AC 1173. The court's task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. Interpretation is a unitary exercise; in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest; similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each."
Issue 1: whether the right to terminate under Clause 10.2(d) arose
"The Supplier may terminate this Contract at any time for all or any Supply Premises if:
…
(d) the Customer passes a resolution for its winding up which shall include amalgamation, reconstruction, reorganisation, administration, dissolution, liquidation, merger or consolidation (other than a solvent amalgamation, reorganisation, merger or consolidation approved in advance by the Supplier) or a petition is presented for, or a court of competent jurisdiction makes an order for, its winding up or dissolution, or an administration order is made in relation to it or a receiver is appointed over, or an encumbrancer takes possession of or sells, one or more of its assets or the Customer makes an arrangement or composition with its creditors generally or ceases to carry on business;" [emphasis added]
Cessation of business
"21. Therefore, in order successfully to merge with Notting Hill without triggering an employment cessation event and, as a consequence, the substantial liabilities under the various pension schemes, it was necessary for Genesis to continue to be an employer. To that end, Genesis remains a registered society under the 2014 Act; it continues to discharge its objectives as a housing association; and does so within the 'wrapper' of NHG through which it continues to trade and employ staff. These factors mean that the pension liability does not crystallise…
"23. For the reasons set out above, Genesis has not ceased to operate its business as a result of the Amalgamation. Instead, it continues to operate the business but as part of and within the amalgamated entity NHG…" [emphasis added]
i) URE has not pleaded that "ceases to carry on business" means carrying on business as a separate entity (paragraph 42.1 of NHG's skeleton);
ii) it is seriously arguable that Genesis still carries on business as part of or within an amalgamated society (paragraph 42.2): the Amalgamation was a statutory process which does not necessarily involve the dissolution of the amalgamating societies, the property of each society vests in the amalgamated society (paragraph 44); the "business" is the operation as a housing association and following the Amalgamation that business was "continued by Genesis but via its amalgamation with Notting Hill" (paragraph 50);
iii) it would make the exemption for an approved amalgamation devoid of significance: the definition of carrying on business must permit continuation of business whether via an amalgamation with another society or otherwise (paragraph 42.3).
i) There was a cessation of business: the clause is widely drafted and "on any sensible reading" of Clause 10.2(d) a dissolution and a cessation of business are alternatives-the cessation of business is listed as a termination event because the Claimant wanted the option to terminate where Genesis was not dissolved and had not entered into any other form of insolvency process (paragraph 38 of URE's skeleton);
ii) The argument that Genesis is carrying on business "as and within" NHG does not make any sense: the effect of the Amalgamation was to deprive Genesis both of its assets and its purpose (paragraph 40);
iii) Whether (as described by Mr Cowan) there was an "employment cessation event" for the purposes of the pension regulations and whether Genesis ceased to trade within the meaning of Clause 10.2(d) are separate questions (paragraph 42).
"Approved in advance"
i) "approved in advance" as a matter of construction means in advance of the winding up/amalgamation not in advance of the resolution (paragraph 33.1 of its skeleton); there is no reason for Genesis to seek approval from an external party before the resolution had been formally put to and approved internally by its members (paragraph 33.2); once the Supplier knows that a solvent amalgamation will happen, it can decide whether to approve it before it commences (paragraph 33.5);
ii) consent must refer to "consent or acquiescence" to continue with the Contract notwithstanding the decision of the customer to effect an amalgamation not the formal approval of the Amalgamation as the Supplier is not within the constituency of members who vote on a restructuring (paragraph 34.1);
iii) whether URE approved the Amalgamation needs to be determined at trial with the benefit of disclosure and cross examination (paragraph 35).
i) as a matter of construction the exception for approved solvent reorganisations was an exception to the general rule which triggers on a resolution for a winding up; it was both logical and made commercial sense for the consent to be required before the vote took place on the resolution such that the vote could take place on an "informed" basis knowing that the supplier would continue to supply;
ii) there had been no request for consent and acquiescence was not sufficient to amount to consent;
iii) the conduct of URE was consistent with not knowing of the right to terminate and there is nothing consistent with approval.
Evidence
"…The effect of the Amalgamation is that all of our properties and other assets, including our Contract(s) with you, will automatically vest in NHG. Consequently, there is no novation or assignment of any Contract required. NHG will assume responsibility for the performance of our obligations from the date of completion of the Amalgamation.
Our amalgamation date is planned for early April 2018; when completed you will be dealing with Notting Hill Genesis (NHG), a new legal entity. We will contact you again in April, once the amalgamation is complete, to tell you about our new address and other legal identifiers, such as our new VAT number.
For the moment it continues to be "business as usual" with respect to invoicing, payment terms, receipt of payment and contact details. Please continue to send all communications to the current address and individual/department with whom you deal at the moment.
You can find more information on our websites at https://www.genesisha.org.uk/about-us/proposed-partnership, but please let me know if you have further questions or if you'd like to discuss in more detail how our plans might affect how we work with you. You can send any queries to me via GenesisSuppliers@genesisha.org.uk."
"…Notting Hill Genesis is a new entity created on 4 April 2018 by the amalgamation of Genesis Housing Association Ltd and Notting Hill Housing Trust…Consequently if you previously dealt with [Notting Hill] or [Genesis] you will need to change our name in your records to [NHG].
All other arrangements…remain unchanged…This change of name is the only action you need to take...
…please let me know if you have further questions or if you'd like to discuss in more detail how our plans might affect how we work with you…"
"The only change in the Name to Notting Hill Genesis all other invoicing stays the same. Until further notice"
"I did not raise any objections to the contents of the [First] Notice. It was not presented to me as a matter capable of objection nor as one which required URE's consent…"
"from [the Second Notice] I understood that the Amalgamation had completed…I had no reason to nor did I seek advice on whether the Amalgamation might enable URE to terminate the Contract…"
"I first became aware of URE's right to terminate the Contract under clause 10.2(d) on 5 November 2018 during the course of a telephone call with Andrew Burnette…" (paragraph 19).
"…We were assured that the 'Amalgamation' of Notting Hill and Genesis to create Notting Hill Genesis (NHG) under section 109 of the Co-operative and Community Benefit Societies Act 2014 would have no impact on our ongoing interactions with you, it was merely a name change. Patently this is not true…
We regret that the situation has reached this point but due to your total change in approach since the Amalgamation and your continued failure to act reasonably, we feel we are left with no alternative…" [emphasis added]
Discussion
i) If it had been intended to say that approval should be obtained "prior to the resolution", that was not stated and I have regard to the fact that this was a professionally drafted contract.
ii) It is clear that there are six "events" which are captured by Clause 10.2(d) as identified below:
"(i) the Customer passes a resolution for its winding up… or (ii) a petition is presented for, or a court of competent jurisdiction makes an order for, its winding up or dissolution, or (iii) an administration order is made in relation to it or a receiver is appointed over, or (iv) an encumbrancer takes possession of or sells, one or more of its assets or (v) the Customer makes an arrangement or composition with its creditors generally or (iv) ceases to carry on business;" [numbering added]
Reading the subclause as a whole, it seems to me that the trigger event with which the Court is concerned is that "a resolution [is passed] for winding up" and the term "winding up" is then defined within the subclause to include a broad range of events ("Winding up Equivalents") which can be viewed as a form of "winding up" but to exclude solvent Winding up Equivalents approved in advance. In my view the list of events clearly refers back to the term "winding up" and not to a resolution for the winding up.
"In my experience it is not unusual for housing associations to amalgamate…"
"I did not raise any objections to the contents of the Notice. It was not presented to me as a matter capable of objection nor as one which required URE's consent…In any event, I had no concerns about the proposal at that time and did not expect it to significantly impact the Contract…"
i) there was enough information in the First Notice about the Amalgamation that when taken with Mr Ensor's own knowledge of housing associations, URE could make an "informed consent".
ii) it is not a prerequisite for consent to be given that it should have been expressly requested.
"…there was no other contemporaneous discussion of the Amalgamation between URE and NHG nor did URE raise any other concerns or queries in relation to the Amalgamation"
NHG therefore rely on consent having been given by conduct. Mr Shergill states (paragraph 33 of his witness statement) that:
"It is clear from URE's conduct as described above that insofar as any approval was needed in relation to the Amalgamation, URE provided such approval by way of its conduct." [emphasis added]
Did the Claimant waive its right to terminate the Contract under Clause 10.2(d) through continuing to perform the same?
"… (1) if a contract gives a party a right to terminate upon the occurrence of defined actions or inactions of the other party and those actions or inactions occur, the innocent party is entitled to exercise that right. The innocent party has to decide whether or not to do so. Its decision is, in law, an election. (2) It is a prerequisite to the exercise of the election that the party concerned is aware of the facts giving rise to its right and the right itself. (3) The innocent party has to make a decision, because if it does not do so then " the time may come when the law takes the decision out if [its] hands, either by holding [it] to have elected not to exercise the right which has become available to [it], or sometimes by holding [it] to have elected to exercise it ". (4) Where, with knowledge of the relevant facts, the party that has the right to terminate the contract acts in a manner which is consistent only with it having chosen one or other of two alternative and inconsistent courses of action open to it (i.e. to terminate or affirm the contract), then it will be held to have made its election accordingly. (5) An election can be communicated to the other party by words or conduct. However, in cases where it is alleged that a party has elected not to exercise a right, such as a right to terminate a contract on the happening of defined events, it will only be held to have elected not to exercise that right if the party "has so communicated [its] election to the other party in clear and unequivocal terms." [emphasis added]
i) The construction of Clauses 10.2, 13.1 and 12.1 and the extent to which, in light of the authorities, these clauses operate to limit or preclude the operation of the waiver by election;
ii) Whether any purported waiver amounted to a "clear and unequivocal" communication (as referred to in Tele2 above);
iii) Whether URE had actual knowledge of the right to terminate.
The construction of Clauses 10.2, 13.1 and 12.1 and the extent to which, in light of the authorities, these clauses operate to limit or preclude the operation of the waiver by election
"The Supplier may terminate this Contract at any time for all or any Supply Premises" [emphasis added].
"No delay or omission by either party in exercising any right, power or remedy under this Contract shall be construed as a waiver of such right, power or remedy and any single or partial exercise shall not prevent any other or further exercise of the same of the exercise of any other right, power or remedy."
"Any notice, or other communication to be given by one party to the other party shall be in writing and addressed and sent to the recipient's address as shown on the Contract Particulars by hand or prepaid post or electronic mail and ..."
i) Tele 2 must be read "subject to" (a) the clause in consideration in that case and (b) the approach adopted by the Supreme Court in MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24;
ii) The decision in Tele 2 concerned a party's ability to terminate a contract following an admitted breach whereas here an event occurred which allowed the Claimant to terminate "at any time";
iii) Clause 13.1 is drafted in wider terms than in Tele 2 and does prevent delay in exercising a right from constituting an election. In so far as election is a question of fact, it was submitted that Clause 13.1 gives rise to a contractual estoppel preventing NHG from arguing that, as a matter of fact, URE has elected to treat the Contract as continuing by reason of delay in, or omission to, terminate the same.
iv) Its submissions are supported by the recent weight of authority "reinforcing the primacy of specific contractual provisions over general rules of law concerning how parties' conduct is to be treated"; Rock Advertising at [11] and [12].
i) It was common ground that the parties may contractually cut down what might constitute a waiver and this was the principle expressed in Rock Advertising of party autonomy and certainty;
ii) The possibility of relying on waiver could therefore be cut down depending on the wording of the relevant provisions;
iii) The position in this case depends on the clauses of the Contract, the starting point being Clause 10.2 and the right to terminate "at any time" read in conjunction with Clause 13.1 which precludes reliance on delay or omission.
i) Rock Advertising establishes that the parties can agree to restrict the effect of post contractual dealings;
ii) However the clause in this case is materially identical to that in Tele 2 and does not restrict waiver by election: Aikens LJ at [55] and [56];
iii) Rock Advertising was concerned with a "no oral variation" clause not waiver by delay;
iv) Clause 13.1 is concerned with "negative sin" not a positive act: Tele 2 and Prakash Industries Ltd v Peter Beck Und Partner [2022] EWHC 754 (Comm);
v) The words "at any time" in Clause 10.2 do not forestall the operation of waiver by election such that there is an ongoing right to terminate.
"…As is made clear in Rock Advertising, the parties to a contract may, in that contract, make provisions which limit the effectiveness which their subsequent dealings might otherwise have had in altering their obligations under that contract. While I accept, as stated in Crédit Agricole Indo-Suez and in RGI International, that a non-waiver clause can itself be waived, it would appear to me to be inconsistent with the recognition in Rock Advertising that party autonomy operates up to the conclusion of the contract and thereafter only to the extent that the contract allows to find that any conduct which would amount to a waiver of the original right also amounts to a waiver of the non-waiver clause. In my judgment there would have to be something which showed that there was not only a waiver but a waiver of the non-waiver clause. An analogy may be drawn which what was said by Lord Sumption JSC in Rock Advertising about estoppels at paragraph 16. Applying that reasoning and language to an alleged waiver, it appears to me that if it is said that waiver prevents reliance on a no waiver clause there would have to be something which indicated that the waiver was effective notwithstanding its noncompliance with the non-waiver clause and something more would be required for this purpose than what might otherwise simply constitute a waiver of the original right itself. In my judgment, applying that test here, the terms of the Notice of Assignment did not meet it." [emphasis added]
"12 Non-Waiver
12.1 No failure or delay by either party in exercising any right or remedy under this Bond shall operate as a waiver; nor shall any single or partial exercise or waiver of any right or remedy preclude the exercise of any other right or remedy, unless a waiver is given in writing by that party.
12.2 No waiver under clause 12.1 shall be a waiver of a past or future default or breach, nor shall it amend, delete or add to the terms, conditions or provisions of this Bond unless (and then only to the extent) expressly stated in that waiver." [emphasis added]
"41. There is no doubt as to the legal effect of entire agreement clauses (Inntrepreneur Pub Co Ltd v East Crown Ltd [2000] 2 Lloyd's Rep 611) and "no oral modification" clauses (MWB Business Exchange Centres Ltd v Rock Advertising Limited [2018] UKSC 24). "No waiver" clauses raise the bar for establishing the elements of a waiver plea, but they do not forestall the application of the doctrine altogether (Tele2 International Card Co SA v Post Office Ltd [2009] EWCA Civ 9, [56] and CDV Software Entertainment AG v Gamecock Media Europe Ltd [2009] EWHC 2965 (Ch) [91])." [emphasis added]
"Ultimately, Mr Spink did not dissent from the proposition that Condition 12.6 (as appears from its wording) applied only to the negative sin of omission and did not exclude the possibility of waiver by positive acts. Thus in Tele2 International Card Company SA v Post Office Ltd, [2009] EWCA (Civ) 9, a similarly worded clause was held not to prevent an affirmation by performance. Likewise, it seems to me that a demand for contractual performance from the other party, such as a demand for payment of a subsequent interest instalment would go well beyond mere delay or omission and amount to a positive waiver of the right to rely on failure to pay an earlier instalment as an Event of Default."
"12.6 No delay or omission of the Bondholders or Holder of any Bond to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by these Conditions or by law to the Bondholders may be exercised from time to time, and as often as may be deemed expedient, by the Bondholders."
i) There is no distinction of any significance to be drawn on the wording of the respective clauses by the different circumstances of termination between Tele 2 and this case: see in particular the judgment in Tele 2 at [49] referring to the provision that entitled the party to terminate "at any time";
ii) The emphasis which the Claimant seeks to place on the words "at any time" in Clause 10.2 are not sufficient even when read with Clause 13.1 to preclude the operation of waiver which is not within the express scope of Clause 13.1: the words "at any time" have to be construed in the context of the other provisions of the Contract and Clause 13.1 deals expressly with waiver; the conclusion must be that waiver was dealt with specifically in Clause 13.1 and there is no indication in the language of Clause 10.2 that the words "at any time" had any relevance to waiver or were intended to broaden the scope of Clause 13.1.
iii) Whilst Clause 13.1 may prevent delay or omission in exercising a right from constituting an election, it is irrelevant for present purposes as the Defendant's case is that there was a positive waiver by the Claimant and not a mere delay by the Claimant in, or omission by the Claimant to, terminate the Contract.
iv) There is a distinction to be drawn between a "no oral waiver" or "no waiver by conduct" which prescribe specific requirements in order to be effective and "no waiver" generally; however even if that is not a distinction which should be made, the judgments in Rock Advertising did not preclude the operation of estoppel and I infer waiver by election: see Lord Sumption JSC at [16] and Lord Briggs JSC at [25] and [31].
v) Further in my view, the clauses in this contract as a matter of construction operate to prevent waiver by delay or omission; they do not prevent waiver by a positive act as is alleged to have occurred in this case; had it been the intention of the parties to preclude all waivers this could have been spelt out (subject to the qualification in Rock Advertising referred to above as to equitable considerations) and there is no reason to give Clause 13.1 a broader interpretation than the express language which is clear and unambiguous.
Whether any purported waiver amounted to a "clear and unequivocal" communication; whether URE had actual knowledge of the right to terminate.
Evidence
i) By continuing to supply electricity to NHG's customers;
ii) By invoicing the new entity NHG and receiving payments from NHG;
iii) By engaging with NHG in relation to the upgrading of meters;
iv) By continuing negotiations in relation to the Long Term Contract.
"The Claimant was not aware of its right to terminate the Contract under clause 10.2(d) following the Amalgamation until I identified and alerted the point to the Claimant in November 2018…" (Burnette 2 para 27(c)
"I was the person who identified and alerted the Claimant of its right to terminate the Contract under clause 10.2(d) during a telephone conversation on 5 November 2018 (privilege in that conversation is not waived). I recall Mr Ensor of the Claimant being pleased because I had identified an additional basis for terminating the Contract which he had previously not been aware of. I can recall having this conversation quite clearly because I was working at home – which was unusual for me at that time – ahead of an important personal appointment." (paragraph 65(a)) [emphasis added]
i) He was the "main contact" at URE for the negotiation of the 4 year contract for the supply of electricity and the Long Term Contract (paragraph 2 of his witness statement);
ii) At the end of October 2018 he did not know or appreciate that URE had the option to terminate the Contract and he first became aware of the right to terminate on 5 November 2018.
"At that time [end of October 2018] I did not know or appreciate that URE had the option to terminate the Contract as a result of the Amalgamation under clause 10.2(d) hence the Termination Letter does not refer to that right. If I had known then about Clause 10.2(d) and the fact that Genesis was required to seek URE's consent before resolving to amalgamate with Notting Hill (which it did not) then I would have referred to that clause in my Termination Letter.
I first became aware of URE's right to terminate the Contract under clause 10.2 (d) on 5 November 2018 during the course of a telephone call with Andrew Burnette of Burges Salmon…" (paragraphs 18-19).
i) URE's conduct was consistent with a decision to continue the Contract (paragraph 62);
ii) Whether URE had knowledge of its right to terminate and armed with that knowledge intended to affirm the Contract is a question of fact to be determined in light of all the circumstances (paragraph 69).
i) Clauses 10.2 and 13.1 must be relevant to the question of whether any action or inaction by the Claimant could be said to amount to "a clear and unequivocal communication of an election" (paragraph 58 of the Claimant's skeleton);
ii) the actions said by NHG to have constituted affirmation/election on the part of URE amount to no more than an assertion that URE continued as it had done before. There is nothing in that conduct which could be said to communicate that URE was aware of its rights and was electing to affirm rather than to terminate the Contract;
iii) the conduct alleged is equally consistent with URE being ignorant of its rights or with URE seeking to explore the relationship with its new contractual counter party before making an election, with URE relying upon its express contractual right to terminate "at any time" (paragraph 59).
i) The initial notice of termination sent by Mr Ensor on 31 October 2018 makes no reference to Clause 10.2 (d) and thus it can be inferred that URE was ignorant of its rights under the clause; the reference to Clause 10.2(d) was only included in the notice from Burges Salmon on 7 November 2018 (paragraph 49);
ii) Even if Mr Ensor was aware of the clause at the outset he could have forgotten about the same (paragraph 50).
i) Clause 10.2(d) was drafted by URE's own solicitors;
ii) The Long Term Contract had an identical termination clause;
iii) Mr Burnette cannot speak with any certainty as to what Mr Ensor knew before their meeting on 5 November 2018 (paragraph 71);
iv) It is to be inferred that URE was aware of its right but elected not to exercise it because it wished to continue the Contract with a view to achieving the "greater prize" of the 25 year Long Term Contract (paragraph 72).
Estoppel
"Equitable estoppel occurs where a person, having legal rights against another, unequivocally represents (by words or conduct) that he does not intend to enforce those legal rights; if in such circumstances the other party acts, or desists from acting, in reliance upon that representation, with the effect that it would be inequitable for the representor thereafter to enforce his legal rights inconsistently with his representation, he will to that extent be precluded from doing so." Lord Goff in The Kachenjunga at p.399
"URE represented to NHG by conduct that it did not treat the Amalgamation as a termination event…" (paragraph 15(11) of the Amended Defence)."
"NHG relied on the above representation and suffered detriment in that it continued to invest resources in the Contract …and/or in negotiating the Long-Term Contract, it did not seek an alternative supplier and/or did not continue its contract with Opus."
Meaning of Clause 10.5
Addendum
After sending the judgment out to counsel in draft in the usual way, I received comments on paragraph 112 of the judgment. I have amended paragraph 112 to clarify the submission made for URE and my reasoning on the issue, but it does not affect the substance of my reasons or the conclusion already reached.