URE ENERGY LIMITED v NOTTING HILL GENESIS

On a summary judgment application, the court must determine whether the respondent has a realistic, rather than fanciful, prospect of success. It must avoid a mini-trial, particularly where apparently credible factual evidence conflicts, but should decide a short point of law or construction where the evidence is sufficient.

Contractual termination provisions must be construed as a whole. A cessation-of-business limb may be read narrowly where a broader construction would duplicate other termination events and negate an express exception for approved solvent amalgamations. A contractual non-waiver clause concerning delay or omission does not necessarily exclude waiver by positive conduct. Election requires knowledge of the relevant facts and right, together with clear and unequivocal communication.

URE Energy Limited applied for summary judgment against Notting Hill Genesis in a claim for a contractual termination payment of approximately £4 million. URE had contracted with Genesis for electricity supply. Genesis and Notting Hill later amalgamated under section 109 of the Co-operative and Community Benefit Societies Act 2014, forming NHG.

URE subsequently purported to terminate the supply contract under clause 10.2(d), relying on the absence of prior approval and on Genesis having ceased to carry on business. NHG argued that the termination right had not arisen and that URE had waived or was estopped from relying on it. The application also raised the meaning of clause 10.5.

The central questions were whether NHG had a real prospect of defending the termination claim and whether any remaining factual disputes required a trial.

1. Summary judgment principles. The principles in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098, applied. The court had to assess whether NHG’s defence carried some degree of conviction, without conducting a mini-trial. Credible conflicting evidence should ordinarily be resolved at trial: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 3.
2. Cessation of business. Clause 10.2(d) had to be construed as a whole. A broad meaning of cessation of business would cause amalgamations, reorganisations and mergers to be caught twice and would undermine the express exception for approved solvent transactions. The narrower construction therefore gave NHG a real prospect of defending this aspect of the claim. In any event, conflicting evidence about whether Genesis continued to operate within NHG was unsuitable for determination summarily.
3. Approval in advance. The contractual wording required approval before the amalgamation took effect, not before the resolution was passed. Approval could in principle be given by conduct, and did not require an express request or written consent. However, the evidence disclosed no positive pre-amalgamation conduct from which approval could realistically be inferred. URE therefore established that NHG had no real prospect of succeeding on this particular defence.
4. Waiver by election. Applying Tele2 International Card Co SA v Post Office Ltd [2009] EWCA Civ 9, the relevant requirements included knowledge of the facts and right, and a clear and unequivocal election. Clauses 10.2 and 13.1 did not exclude waiver by positive conduct. Clause 13.1 addressed delay or omission, while the words permitting termination at any time did not prevent waiver as a matter of fact. NHG had a real prospect of proving both knowledge and waiver, and factual investigation at trial was required.
5. Estoppel. The principle stated by Lord Goff in The Kachenjunga applied. Although NHG had a real prospect of establishing a representation by conduct, it had no real prospect of proving reliance-based detriment. The alleged losses would have arisen independently of any representation that URE would not terminate.
6. The court did not determine the meaning of clause 10.5 because the waiver issue was sufficient to dispose of the application.

The application for summary judgment was dismissed.