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

Having received some advice from Burges Salmon, Mr Ensor drafted a letter (without the solicitors’ input) which was hand-delivered to NHG on 31^st October 2018. After complaining about the termination of negotiations for the long-term contract, the letter gave notice of termination of the four year contract on the ground of NHG’s failure to provide access for the replacement of electricity meters, which it alleged was a breach of clause 10.2(b). URE claimed a termination payment of £3,999,457.38, being 50% of the estimated charges which would be payable to URE over the remaining term of the contract. The letter’s only mention of the amalgamation was a complaint that NHG’s assurance that the amalgamation ‘would have no impact on our ongoing interactions with you’ and was ‘merely a name change’ was ‘patently not true’.

However, after Burges Salmon had queried with Mr Ensor whether URE had given 10 days’ notice to remedy the breach as required by clause 10.2(b), URE decided to revoke its termination of the contract and did so by a letter dated 2^nd November 2018 which maintained that NHG was in material breach of the contract for failing to provide access and requested it to remedy the situation within 10 days.

On 5^th November 2018 a telephone conversation took place between Mr Ensor and Mr Andrew Burnette, a litigation partner in Burges Salmon, during the course of which Mr Burnette advised that URE could have a right to terminate without notice on the basis that NHG had not sought URE’s approval for the amalgamation. This was the first occasion on which Mr Ensor became aware that URE might have such a right.

This led to a second termination letter, this time from Burges Salmon and dated 7^th November 2018. After demanding payment of outstanding invoices on the basis that the advance payment arrangement was still in operation, the letter continued as follows:

‘OTHER BREACHES OF CONTRACT

The amalgamation of Notting Hill Housing and Genesis Housing Association in April 2018 without approval in advance by our client entitles our client to terminate the Contract pursuant to clause 10.2(d). Giving our client notice of the amalgamation shortly beforehand does not amount to the seeking of approval.

Accordingly, our client hereby gives notice pursuant to clause 10.4 that the Contract will terminate at 4pm on 14 November 2018. If NHGHA has not put in place a replacement supplier by this date, then clauses 10.9 and 2.3 shall apply, such that our client will continue supply under a deemed contract at the Deemed Tariff Rates as notified to you in our client's letter dated 31 October 2018.

Further, NHGHA has been in persistent, long-standing and material breach of clause 6.3 of the Contract by failing to allow our client's representatives to have reasonable access to Metering (as defined). This is a matter which has been drawn to your attention by our client on a number of occasions and, we understand, is acknowledged by you. The denial of access to Metering amounts to a fundamental obstruction to our client's effective performance of the Contract. It means that our client cannot acquire accurate data for billing purposes nor exchange meters for smart meters to enable collation of accurate consumption data for estimating purposes.

Our client has already given you notice to remedy this breach of the Contract within 10 days (by 14 November 2018). We further consider that your client's clear breaches of clause 6.3 inevitably amount to breaches of clause 5.1.

CONSEQUENCES OF TERMINATION

In accordance with clause 10.5 of the Contract, upon a termination by our client pursuant to clause 10.2, NHGHA is obliged to pay our client 50% of the remaining value of the Contract within 10 days. Our client calculates the relevant sum to be £3,946,861.78 based on the annual consumption of the Supply Premises extrapolated from termination of the Contract on 14 November 2018 until its intended End Date of 30 September 2021. Please pay this sum into our client's account provided on its invoices by 24 November 2018, failing which we anticipate instructions to commence further High Court proceedings for its recovery immediately thereafter without further notice to you…’

It is perfectly clear that the amalgamation, which URE had known about for more than seven months and to which it had never had any objection, was seized on as a justification for termination of the contract with a view to claiming a termination payment, once it became clear that there would be no long-term contract, that NHG was no longer willing to pay for electricity in advance, and that URE was facing insolvency.

On 13^th November 2018, NHG paid URE’s October invoice under protest, no doubt to avoid any possibility of URE terminating for non-payment. At 16:10 on 14 November 2018 (10 minutes after expiry of the 16:00 deadline set by Burges Salmon), NHG hand-delivered its own letter to URE addressing only the amalgamation issue and asserting that the amalgamation did not give rise to any right to terminate under clause 10.2(d) of the contract and that the second termination letter was therefore a repudiatory breach of contract:

‘The purported termination of the Agreement by you, as set out in the letter from your solicitors, is wrongful and constitutes a repudiatory breach by you of the Agreement between us. By this letter we hereby give notice of our election to accept that repudiatory breach, which means that the Agreement comes to an immediate end.

Our acceptance of your repudiatory breach entitles us to claim damages in respect of our losses arising from your breach. Our solicitors will correspond with your solicitors to set out the basis of our claim for these damages and to seek to agree a mechanism for a final reconciliation of the amount owed between the parties for electricity used (both before the termination of the Agreement and on the basis of the deemed contract that now arises). This reconciliation will take account of the credit balance which you hold in our name.’

In a second letter of the same date, NHG denied any breach in failing to provide access to meters, albeit noting that this was purely for the record as the contract had already been terminated.

Following the termination of the Contract, URE effectively ceased to operate. Without the prospect of the long-term contract, it was unable to secure funding with the result that it ultimately failed to meet its regulatory obligations. Its energy supply licence was accordingly revoked by Ofgem on 14^th September 2019. Its sole asset is the present claim against NHG.