Willett v Economy Power Ltd

To recover contractual damages, the claimant must show that the breach was the effective or dominant cause of the loss. Causation is assessed by common sense, asking whether the breach caused the loss or merely provided the occasion for it. A claimant’s own conduct may mean that a subsequent bankruptcy order and the costs of setting it aside were not caused by an unjustified demand for payment. A compromise agreement to cancel an account and make a refund is not a contract for the provision of services attracting the implied term under section 13 of the Supply of Goods and Services Act 1982. A consent order providing no order as to costs may compromise a later claim for bankruptcy-proceedings costs. Appeal dismissed.

Mr Willett claimed more than £450,000 from Economy Power in contract, negligence, malicious prosecution of a bankruptcy petition and malicious falsehood arising from an electricity supply arrangement. The malicious falsehood claim was abandoned at trial.

HHJ Gosnell found that the supply contract was ineffective or subject to an unfulfilled condition precedent, and that a later compromise agreement required Economy Power to cancel the account and refund £1,412. Economy Power breached that agreement by pursuing payment. The judge awarded £405.95 for interest but rejected the claimed costs of dealing with the bankruptcy proceedings, finding them unconnected with the breach and compromised by a consent order.

Limited permission to appeal concerned those costs, and raised causation, tortious responsibility, section 13 of the Supply of Goods and Services Act 1982, and the effect of the consent order.

1. Disposition and procedure. The appeal was dismissed unanimously. Although Mr Willett was absent, the court inferred that his former solicitors had probably informed him of the hearing. It therefore proceeded, leaving him able to apply to set aside the judgment if evidence justified that course.
2. Causation. The trial judge’s reasoning, expressed principally in terms of remoteness, was more appropriately characterised as a finding on causation. In a contractual claim, the breach must be the effective or dominant cause of the loss. There is no formal test; the issue is determined by common sense, including whether the breach caused the loss or merely provided its occasion. The court treated the formulation supported by Galoo Ltd v Bright Grahame Murray [1994] 1 WLR 1360 as correct.
3. The evidence supported the conclusion that Economy Power’s unjustified demand did not cause the bankruptcy order or the costs of setting it aside. The claimant had evaded service and concealed his whereabouts. The ordinary response to an unfounded demand would have been to resist it and explain the compromise. The judge’s finding was therefore within the range of reasonable conclusions open to him.
4. Alternative issues. A tort claim for purely economic loss would require an assumption of responsibility specifically directed to avoiding the type of loss claimed, but that issue was academic. The compromise agreement was not a contract for the provision of services attracting the implied term under section 13 of the Supply of Goods and Services Act 1982; it was an agreement to cancel an account and make a refund. That analysis would not have overcome the causation problem.
5. Consent order. The correspondence reserved further claims for loss arising from the bankruptcy petition, not the costs of the bankruptcy proceedings themselves. Read with the consent order providing no order as to costs, it compromised the claim for solicitors’ and insolvency advisers’ fees. The trial judge was right on that issue also.

1. Court of Appeal (Civil Division): On 12 July 2012, the court dismissed the appeal.
2. High Court, Queen’s Bench Division, Leeds District Registry (HHJ Gosnell): Following a three-day trial in September 2011, the judge awarded Mr Willett £405.95, made no order as to his costs, and ordered him to pay 90 per cent of Economy Power’s costs together with £40,000 on account.