King & Ors v Residential Marine Limited

Where a protected-site agreement requires an occupier to pay for electricity but does not fix the price or method of calculation, the agreement contains an implied term that the price will be reasonable. The electricity reseller’s statutory maximum resale price is a ceiling, not the contractual price. A charge based on the highest tariff is unreasonable where the available evidence supports a blended rate reflecting actual weekday and weekend usage. Climate change levy payable by a reseller must not be passed on to domestic consumers. The First-tier Tribunal may determine the reasonable price under section 4 of the Mobile Homes Act 1983.

The appellants occupied mobile homes on a protected site operated by Residential Marine Limited. Their written statements required payment for electricity supplied by the site owner but did not state the applicable price or its method of calculation.

The First-tier Tribunal accepted the respondent’s methodology, which was based substantially on the weekday tariff, and held that a contribution towards climate change levy could be charged. The appellants appealed concerning the correct unit rate and the levy. The central issues were whether the agreement fixed or otherwise determined the price, what constituted a reasonable resale price, and whether the levy could be passed on to domestic occupiers.

1. Appeal allowed. The written statements required payment for electricity but contained no term fixing the price or explaining how it was to be determined. Applying ordinary contractual principles, a term was implied that the respondent would resell electricity at a reasonable price. That question arose under the agreements and could be determined by the FTT under section 4 of the Mobile Homes Act 1983.
2. The direction made under section 44(1) of the Electricity Act 1989, and the related Ofgem guidance, fixed a maximum resale price. They limited the amount that could be charged but did not define the contractual price or incorporate the respondent’s chosen methodology into the agreements.
3. The climate change levy was not payable by domestic consumers and could not be passed on to them by the reseller. The FTT had misunderstood the effect of HMRC’s guidance. Where premises have mixed use, the applicable relief and any chargeable commercial element must be assessed under the mixed-use provisions. The appeal was therefore allowed on this issue.
4. The FTT had relied on unsupported assumptions about the character of the electricity supply and had made a material arithmetic error when assessing the appellants’ share of consumption. The evidence did not justify charging the appellants by reference to the highest weekday tariff. In principle, the reasonable unit rate was a blended rate based on weekday and weekend tariffs in proportions reflecting usage shown by the relevant bills, together with a proportionate contribution to capacity and standing charges, but excluding climate change levy.
5. Using the September 2019 bill, the appropriate rate was 17.59p per kWh including VAT. The Tribunal did not quantify charges for all other periods because only one bill had been produced. The application was remitted to the FTT. The respondent was directed to provide the relevant British Gas bills within one month, after which the parties were to agree or have determined the historic charges and any repayment or credit.

• Upper Tribunal (Lands Chamber): appeal from the FTT’s decision issued on 23 March 2021 and amended on 28 April 2021. The appeal was allowed and the original application was remitted for further consideration.