CA-2024-002472 - [2025] EWCA Civ 1407

By October 2018 the parties’ relationship was beginning to cool. NHG was concerned about what it regarded as overcharging of its residents by URE, while URE was complaining about the lack of access to sites, which meant that bills had to be estimated and AMR meters enabling accurate billing could not be installed. It was at this stage also that the issue about the payment terms arose. While Mr Ensor believed that the agreement for payment in advance was to last until the long-term contract was in place, NHG’s understanding was that it was only to last for one year, after which the parties would revert to payment in arrears.

Matters came to a head at the beginning of October 2018 when URE submitted its invoice for November’s estimated supplies. This was queried by NHG on the basis that payment in advance had only been agreed for one year, after which invoices would revert to being settled in arrears. In an email dated 8^th October 2018, NHG informed Mr Ensor that the matter had been referred to its directors and that it could be a real problem.

The parties met on 9^th October 2018 to discuss both the long-term contract (which was still under negotiation) and NHG’s proposed change to the payment arrangement. Mr Ensor asked whether NHG would be prepared to allow a three-month notice period before reverting to billing in arrears in order to allow URE to put funding in place. However, this request was refused by NHG. On 17^th October 2018 NHG informed Mr Ensor by telephone that the payment terms were to revert to the contractual position with immediate effect. Mr Ensor’s response was that this would likely result in URE being wound up.

In an attempt to resolve the issue over payment terms, Mr Ensor emailed NHG on 23^rd October 2018 making clear that it had not been his understanding that the advance payment agreement was only to last for one year and proposing a short-term factoring arrangement whereby URE would get paid in advance but NHG would only pay in arrears. However, NHG did not accept this proposal.

In fact, NHG had decided by this time that it wanted to end its relationship with URE, and on 29^th October 2018 gave written notice (as it was entitled to do) that it no longer intended to proceed with the long-term contract. This was devastating news for URE, for whom this contract was critical. It had no other customers and the long-term contract, which it thought it had effectively secured, was critical to generating the income which it needed to sustain the business and also to clear Mr Ensor’s personal debts. He had not appreciated that NHG was under no binding obligation to proceed with the long-term contract.

On receipt of this message, Mr Ensor sought advice from Burges Salmon whether URE could argue that NHG was bound to continue with the long-term contract, alternatively that it had constructively terminated the four year contract by restricting URE’s ability to trade through changing the payment terms. He was acutely aware of the real possibility that URE might have to be placed in administration. He followed this with requests for advice as to URE’s rights if NHG had not provided access for the purpose of taking meter readings and enabling the installation of AMR meters, but did not at this stage refer to the amalgamation or clause 10.2(d).