Matthew James Cowlishaw & Ors. v Octopus Energy Retail 2022 Limited

When appointing the effective time for an energy transfer scheme, the court’s role is principally jurisdictional and concerned with timing. It must ascertain that the statutory requirements are met, including that the transfer is of so much of the undertaking as is appropriate for achieving the continuation of energy supplies as a going concern. It need not decide whether the scheme achieves the statutory objective at the lowest reasonably practicable cost. That substantive approval function belongs to the Secretary of State. The court’s discretion concerns matters such as ensuring a smooth transfer. A challenge to the Secretary of State’s approval, and any application to suspend its effect, should ordinarily be dealt with by the Administrative Court in judicial review proceedings.

The energy administrators of Bulb Energy Ltd applied under paragraph 3(4) of Schedule 21 to the Energy Act 2004, as applied by the Energy Act 2011, for the appointment of an effective time for an energy transfer scheme. The scheme provided for the transfer of the energy-supply business to a subsidiary and the subsequent transfer of that subsidiary’s shares to Octopus Energy Retail 2022 Ltd.

Several energy companies opposed the application. They argued that the court had to determine whether the scheme would secure continuing energy supplies at the lowest reasonably practicable cost and should defer fixing the effective time pending judicial review proceedings challenging the Secretary of State’s approval. The central issues were the scope of the court’s jurisdiction and discretion under Schedule 21 and the proper forum for interim relief.

1. Jurisdiction. The court rejected the contention that it had to be satisfied that the scheme would achieve the statutory objective of continuing energy supplies at the lowest reasonably practicable cost. Section 95(3) of the Energy Act 2011 refers to a transfer of so much of the undertaking as is appropriate for achieving the objective. It does not require the court to establish that the proposed scheme will in fact achieve that objective or secure the lowest practicable cost: paras [58]-[81].
2. The relevant inquiry is whether a sufficient part of the undertaking is being transferred as a going concern to enable energy supplies to continue without the energy company administration needing to remain in force for that purpose. This is a relatively low threshold. A transfer intended to enable continuing energy supplies falls within section 95(3): paras [77]-[82].
3. Discretion. The court’s discretion under paragraph 3(4) of Schedule 21 concerns timing, including practical matters required for a smooth transfer of property, rights and liabilities. It does not include a parallel substantive review of the scheme’s merits, the administrators’ compliance with their duties, or the lowest-cost question. Alleged breaches of administrators’ duties may instead be raised under paragraph 74 of Schedule B1 to the Insolvency Act 1986: paras [83]-[89].
4. The jurisdictional requirements were satisfied. Bulb was in energy company administration; rescue as a going concern was not reasonably practicable; the scheme had been approved by the Secretary of State; the transfer was of an appropriate part of the undertaking as a going concern; and the scheme contained permitted provisions. Clauses concerning administrators’ personal liability and third-party waivers did not take the scheme outside Schedule 21: paras [90]-[93].
5. The court accepted that delaying the effective time should be approached by balancing the consequences of granting or refusing interim relief. However, a challenge to the Secretary of State’s approval was properly a matter for the Administrative Court, which could assess permission, merits, parties, public-interest considerations, timing and cross-undertakings. The court therefore appointed 23:58 on 20 December 2022 as the effective time, with liberty to apply if the Administrative Court suspended the Secretary of State’s decision: paras [100]-[116].