Flowgroup Plc v Co-Operative Energy Ltd

In a share sale dispute, a contractual limitation clause covering any and all Claims was construed according to its broad wording. It limited the buyer’s repayment claim arising from a completion price adjustment to £1, in addition to the contractual retention amount.

Summary judgment may be granted where pleaded breach, estoppel or rectification defences have no real prospect of success. For estoppel, detriment is assessed by comparing the party’s actual position with the position it would have occupied absent the relevant representation or event. A delay causes no actionable detriment where the counterfactual leaves the defendant no worse off. A rectified term cannot assist where the alleged breach of that term caused no prejudice.

Flowgroup sold the shares in Flow Energy Limited to Co-Operative Energy under a share sale agreement and related side agreement. Completion was delayed by one day, after which the defendant withheld part of the sum claimed for cash collateral.

The claimant sought summary judgment. The defendant relied on alleged breach of contract, estoppel by representation or convention, rectification, and a price-adjustment cross-claim said to support set-off. The principal issues were whether those defences had a real prospect of success and whether the contractual liability cap applied to the price-adjustment claim.

1. Summary judgment. The claimant was entitled to summary judgment. Assuming that the delayed completion resulted from the claimant’s breach, the defendant suffered no loss. Comparing the actual position with the position on completion on the original date showed that the defendant was slightly better off.
2. Estoppel. The pleaded representation was that neither party would be prejudiced by the one-day delay. The court applied the principles stated in HM Revenue and Customs v Benchdollar Ltd and related authorities. The defendant’s actual position was no worse than its counterfactual position. There was therefore no detriment, and the claimant was not resiling from the representation. The alternative arguments concerning transfers between the accounts, ordinary operation of the distribution account, and payments to creditors did not create an arguable defence.
3. Rectification. The requirements stated in Swainland Builders Ltd v Freehold Properties Ltd, as approved in Chartbrook Ltd v Persimmon Homes Ltd, were assumed to be satisfied for the purposes of the application. Even if the agreement were rectified to include a no-prejudice term, there had been no breach because the delay caused no prejudice.
4. Limitation clause and set-off. The broad wording of Schedule 7 covered a buyer’s claim for repayment following the expert determination of the completion accounts. Reading the agreement as a whole, the cap was commercially coherent because the buyer also had the retention amount available for set-off. The repayment claim was therefore limited to £1 above the £1,000,000 retention. Although insolvency set-off was available in principle, the capped claim had no real value and did not justify refusing summary judgment or granting a stay.
5. The defendant’s security-for-costs application did not arise.