A L Challis Ltd v British Gas Trading Ltd

On an application for summary judgment, the court must decide whether the claim has a realistic, rather than fanciful, prospect of success. It must avoid a mini-trial while considering evidence reasonably available at trial. A short point of law or construction may be decided summarily where the evidence is sufficient. However, construction should be left to trial where disputed evidence about the factual matrix, shared objectives or commercial consequences may affect the outcome.

A L Challis Ltd claimed further payment from British Gas Trading Ltd under agreements concerning water-saving products supplied for the Carbon Emissions Reduction Target scheme. Challis argued that payment should reflect the 50% market transformation uplift in carbon credits and that British Gas was obliged to claim it. British Gas contended that the agreements provided a fixed-price formula independent of credits claimed or awarded.

British Gas applied to strike out the claim under CPR rule 3.4(2)(a) and for summary judgment under CPR rule 24.2(a). The central issue was whether the contractual construction and any implied terms could properly be determined without a trial.

1. Application dismissed. The strike-out and summary judgment applications raised the same essential question. The former added nothing to the latter.
2. For summary judgment, the court must ask whether the claimant has a realistic prospect of success. It must not conduct a mini-trial, but need not accept unsupported factual assertions without analysis. It must consider evidence before it and evidence reasonably available at trial.
3. The court should hesitate before deciding finally without a trial where fuller factual investigation may add to or alter the evidence and affect the outcome. Conversely, it should decide a short point of law or construction where the necessary evidence is available and the parties have had an adequate opportunity to argue it.
4. The rival contractual constructions could not safely be resolved summarily. There were material disputes about the parties’ common assumptions and discussions, including whether both expected British Gas to claim the market transformation uplift. Although subjective intentions are inadmissible, shared common objectives may form part of the factual matrix.
5. The parties also disputed the commercial consequences of the rival constructions, including the significance of the 10% cap on market transformation activity and British Gas’s commercial flexibility. Those matters could inform the iterative construction process. The issues were therefore best determined at trial.