Bulk-Metered Electricity: Deemed Liability Falls on the Owner Where No Single Occupier Occupies the Whole Premises

1. Introduction

This judgment determines who must pay a licensed electricity supplier when electricity reaches a multi-occupied property through a single bulk meter and no express supply contract governs the supply. The Court of Appeal held that, for paragraph 3(1) of Schedule 6 to the Electricity Act 1989, the relevant “premises” are the whole property served by that bulk meter. Those premises are “unoccupied” in the provision’s particular statutory sense if no single occupier occupies their entirety. In that situation, the owner becomes the supplier’s deemed contractual counterparty, notwithstanding the presence of tenants in individual units.

The dispute arose between SmartestEnergy Business Limited, the licensed supplier, and Odeon Arcade Limited, the owner of a shopping arcade. British Gas Trading Limited intervened through written submissions. Although the immediate proceedings concerned a winding-up petition, the decision has wider significance for blocks of flats, shopping centres, holiday parks and other developments supplied through a common meter.

The central interpretative question was whether the ordinary meaning of “unoccupied” should prevail despite the statutory and practical difficulties it produced. The Court unanimously concluded that the provision’s context and purpose required a more specialised meaning.

2. Background and Procedural History

Odeon acquired the arcade in June 2021. Smartest supplied electricity through a bulk meter in a basement. Its evidence indicated that the supply served three retail units, the basement and communal facilities, including lighting, shutters and fire alarms. Sub-meters were found downstream of the bulk meter, apparently recording consumption in different parts of the property. The Court did not determine who had installed them.

Odeon maintained that all three retail units were occupied by tenants throughout the relevant period. It therefore denied that it could be liable as owner under a provision imposing owner liability only where premises were “unoccupied”.

On 2 April 2024, Smartest presented a winding-up petition alleging a debt of £106,914.25. The petition referred to electricity supplied to the three units between July 2021 and April 2023, together with ongoing standing charges. The judgment separately records that Smartest disconnected its supply to the bulk meter on 20 February 2023.

Odeon applied to restrain advertisement of the petition and obtain its dismissal. Deputy Insolvency and Companies Judge Agnello KC accepted that the relevant premises were the separately occupied units. Because tenants occupied those units, no deemed contract had arisen with Odeon as owner. She restrained advertisement and dismissed the petition.

Cawson J dismissed Smartest’s first appeal: [2025] EWHC 2975 (Ch). He considered that describing premises occupied by several tenants as “unoccupied” strained, or contradicted, ordinary language. He also rejected the suggestion that imposing liability on tenants would produce consequences sufficiently unworkable to justify Smartest’s construction.

Smartest then appealed to the Court of Appeal.

3. The Statutory Framework

The deemed-contract provision

Paragraph 3(1) of the Electricity Code in Schedule 6 to the Electricity Act 1989 provides:

“Where an electricity supplier supplies electricity to any premises otherwise than in pursuance of a contract, the supplier shall be deemed to have contracted with the occupier (or the owner if the premises are unoccupied) for the supply of electricity as from the time (‘the relevant time’) when he began so to supply electricity.”

The mechanism supplies a legally enforceable contractual relationship where electricity continues to be supplied without an expressly agreed contract. It addresses a practical feature of the energy market: supply cannot efficiently be disconnected and reconnected whenever a customer moves, and suppliers may not immediately know that occupation or ownership has changed.

Licensing, resale and metering

Several connected provisions informed the Court’s interpretation:

• Sections 4 and 5: supplying electricity to premises ordinarily requires a licence, subject to exemptions. Class B of the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 accommodates certain arrangements involving electricity initially supplied by a licensed supplier and subsequently resupplied.
• Section 64: “premises” includes “any land, building or structure”.
• Schedule 7, paragraph 1: where charges depend wholly or partly on consumption, supply and measurement ordinarily require an appropriate meter. Importantly, a meter may be positioned outside the customer’s premises or elsewhere where reasonable.
• Section 44: the Gas and Electricity Markets Authority may regulate maximum resale prices. The direction discussed in the judgment concerns electricity resold for domestic use or accommodation; it should not be treated as imposing an identical price-control regime on every commercial resale.

The judgment also noted prescribed exceptions permitting unmetered supplies, principally for predictable loads in specified circumstances. Those exceptions did not displace the importance of metering to the statutory scheme under consideration.

Deemed electricity contracts were introduced by the Utilities Act 2000, drawing inspiration from the Gas Act 1986. The Court nevertheless recognised that the gas and electricity provisions do not correspond precisely.

4. Summary of the Decision

The Court of Appeal unanimously allowed Smartest’s appeal and set aside both lower-court orders. Newey LJ gave the principal judgment; Falk LJ agreed, and Fancourt LJ supplied additional supporting reasons.

The decision establishes three connected propositions:

1. Identify the whole supply premises: where a licensed supplier supplies electricity through a bulk meter, the relevant premises are the entirety of the property receiving that supply, not each separately occupied unit.
2. Apply a contextual meaning of occupation: those premises are “unoccupied” for paragraph 3(1) if there is no single occupier of their entirety, even though individual parts are physically occupied.
3. Impose the deemed obligation on the owner: in that situation, and where the statutory conditions for a deemed contract are satisfied, the owner is liable to the licensed supplier.

Newey LJ accordingly concluded that Odeon was indebted to Smartest as alleged in the winding-up petition. The appellate disposition was to set aside the orders dismissing the petition and restraining its advertisement; the judgment did not itself make a winding-up order.

5. Precedents Cited and Their Influence

Examples of bulk supply and onward resale

East Tower Apartments Ltd v No.1 West India Quay (Residential) Ltd [2016] UKUT 553 (LC) concerned a substantial building containing a hotel and residential apartments. Electricity entered through two bulk meters, with sub-meters measuring consumption in the hotel, apartments and other areas.

King v Residential Marine Ltd [2021] UKUT 0309 (LC) concerned a marina incorporating a mobile home park. Electricity was supplied under a contract with the marina owner and resold to occupants.

These Upper Tribunal decisions illustrated established bulk-supply arrangements rather than deciding the present interpretative issue. They helped demonstrate why paragraph 3(1) needed to operate coherently across developments containing numerous independent consumers.

Statutory interpretation: text, context and purpose

Four Supreme Court authorities supplied the interpretative framework:

• Darwall v Dartmoor National Park Authority [2025] UKSC 20, [2025] AC 1292, paragraph 15: statutory meaning is ascertained from the words used, considered in their context and in light of the provision’s purpose.
• R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department [2022] UKSC 3, [2023] AC 255, paragraph 29: statutory words and passages derive their meaning from context.
• Rossendale BC v Hurstwood Properties (A) Ltd [2021] UKSC 16, [2022] AC 690, paragraph 10: identifying legislative purpose is centrally important to interpretation.
• R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28, [2023] 1 WLR 2594, paragraph 41: an Act’s purpose and scheme provide the basic framework for understanding its language.

These authorities justified moving beyond an isolated dictionary meaning of “unoccupied”. They did not establish that inconvenient wording may simply be ignored. Rather, they required the Court to determine what the word means within this particular system of licensed supply, metering and substitute contractual liability.

Occupation is context-dependent

In Graysim Holdings Ltd v P & O Property Holdings Ltd [1996] AC 329, at page 334, Lord Nicholls explained that occupation is not a legal term with one precise meaning applicable in all circumstances. Its meaning changes with the subject matter.

That proposition directly answered the assumption underlying the lower courts’ approach: physical occupation of individual units did not necessarily settle whether the supply premises were “unoccupied” for this statutory purpose.

Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18, [2022] 1 WLR 3360, paragraph 106, provided an especially close methodological analogy. Addressing “occupier” under the Electronic Communications Code, Lady Rose explained that the court should first understand how the statutory regime is intended to work, and then identify the meaning of occupation best suited to that regime.

The Court applied that approach without importing the substantive telecommunications rules into electricity law. The significance lay in the method: occupation must be understood functionally within the relevant statutory structure.

6. Analysis of the Court’s Legal Reasoning

A. The supply premises are not defined by individual tenancies

The first question was what property the licensed supplier was supplying. Newey LJ considered that, read naturally, the supplier supplies the whole land, building or structure receiving electricity through the bulk meter. The separate legal boundaries of individual tenancies do not fragment that licensed supply into multiple supplies for paragraph 3(1).

This conclusion was reinforced by the metering provisions. A licensed supplier with one bulk meter can measure aggregate consumption, not the consumption of each individual occupier. Construing the legislation as creating numerous separate deemed contracts would therefore disconnect liability from the statutory means of measuring the supply.

The relevant whole is the property served by the bulk meter. The decision does not establish that every part of an owner’s freehold necessarily forms part of the supply premises.

B. The meter’s physical location does not identify the contractual counterparty

British Gas advanced an alternative route to owner liability. It argued that the landlord would commonly occupy the location receiving the licensed supply, such as a locked basement or retained common parts, and would then resupply electricity to tenants.

The Court rejected that as the governing interpretation. Electricity is supplied through a meter, not merely to its immediate location. A meter may stand in common parts, inside a tenant’s unit, on an external wall, or outside the customer’s premises altogether. Its position therefore cannot reliably define either the supply premises or the person liable.

This is an important limitation on the decision: owner liability does not depend on proving that the owner occupies the meter cupboard.

C. The competing tenant-liability models were unsatisfactory

Cawson J had identified three possible consequences of rejecting owner liability. The Court of Appeal examined each.

1. Separate liability for each tenant’s unit. This depended on treating each unit as the relevant premises, which the Court rejected. It also lacked a corresponding licensed-supplier meter measuring each tenant’s consumption.

2. One contract making all occupiers jointly and severally liable. This would permit the supplier to recover the entire building’s electricity bill from an individual tenant. Newey LJ considered it highly improbable that Parliament intended that substantial exposure without making it clear.

3. One contract with an implied limitation to individual consumption. This would require difficult allocation exercises and an implied contractual term for which no sufficient basis had been identified. It was also inconsistent with the scheme’s reliance on appropriate meters.

The implied-term proposal presented a further conceptual problem. If a term were needed merely to avoid an absurd consequence of a particular statutory construction, that could indicate that the construction itself was wrong, rather than justify judicially adding the term.

D. Owner liability coheres with the organisation of bulk supply

The Court acknowledged that an owner might consume none of the electricity personally. Its reasoning was not that the owner must necessarily be the physical consumer, but that the owner is ordinarily best placed to organise responsibility for a common supply.

An owner can typically identify the areas supplied, establish who occupies them, install sub-meters, and arrange for occupiers to contribute towards their consumption. Those capabilities provide a rational basis for placing aggregate liability on the owner rather than imposing the whole bill on unrelated tenants.

The deemed-contract mechanism also substitutes for the express contract that would ordinarily have been made. For a block supplied through one bulk meter, an individual tenant would not plausibly undertake responsibility for the entire building. The landlord is the natural contractual counterparty. That commercial structure supported making the owner the deemed counterparty when an express contract was absent.

This reasoning does not itself create an unrestricted right to recover charges from tenants. Any onward recovery must have an appropriate legal basis and comply with applicable regulatory requirements.

E. The related provisions did not compel the ordinary meaning

The Court considered provisions concerning meter access, damage and disconnection because they also use the language of occupation:

• Paragraph 7: the requirement for at least two working days’ notice before exercising specified meter-entry powers did not make owner-focused notification absurd. Requiring notification to every occupier could be impractical, particularly where the supplier did not know the internal occupation arrangements.
• Paragraph 6: provisions permitting disconnection following certain damage offences did not decisively support tenant-based occupation. Allowing one tenant’s wrongdoing to expose the whole development to disconnection would itself raise difficulties.
• Paragraph 2: the requirement for at least seven working days’ notice before specified non-payment measures gave some support to notifying actual users. Nevertheless, notifying the legally liable party, who might control the meter, remained a sensible statutory arrangement.

These provisions formed part of the interpretative cross-check. They did not outweigh the difficulties created by imposing aggregate liability on tenants.

F. Fancourt LJ’s additional explanation

Fancourt LJ initially shared the concern that calling occupied premises “unoccupied” stretched ordinary language. He nevertheless agreed that none of the competing tenant-liability models satisfactorily explained a multi-occupied building with one licensed supply.

His concurrence emphasised the moment at which the deemed contract arises. When an existing supply contract ends and supply continues, the legislation immediately needs an identifiable counterparty. In the ordinary single-occupier case, that will be the owner if the premises are empty, or the occupier if already present.

For multi-occupied premises supplied in bulk, the corresponding interim counterparty is the landlord or new landlord. That mirrors the arrangement ordinarily made through an express bulk-supply contract. Fancourt LJ therefore understood “unoccupied” as addressing the absence of a person occupying the premises in the sense associated with using the entire supply.

G. The alternative factual observation was not the ratio

Newey LJ added that Odeon might have been liable even under the rejected constructions because the evidence suggested it occupied the basement containing the meter and possibly the walkway served by it. He expressly described that point as irrelevant to his decision.

That observation was therefore not the binding foundation of the judgment. The appeal succeeded on statutory interpretation, not on a definitive factual finding that Odeon occupied particular common areas.

7. Significance and Potential Impact

Greater certainty for bulk-supply debts

The judgment identifies a workable debtor where one licensed supply serves independently occupied parts of a property. Suppliers need not attempt to construct separate deemed relationships with every tenant or allocate an aggregate meter reading through judicial implication.

Material exposure for property owners

Owners of multi-let developments cannot avoid deemed liability merely by showing that tenants occupy all individual units. Where no single occupier occupies the whole supply premises, an absence of an express contract may expose the owner to the aggregate bill.

The practical response is to establish clearly which areas each supply serves, who holds the supply contract, and how consumption and standing charges are lawfully allocated. The case does not make every landlord liable for every tenant’s separately contracted electricity supply.

Protection against unexpected aggregate tenant liability

A significant consequence is the rejection of joint and several liability for unrelated occupiers under one deemed bulk-supply contract. Tenants are not, merely because they occupy part of the supplied property, made responsible on that basis for everybody else’s consumption.

Questions left unresolved

Newey LJ expressly acknowledged that the interpretation does not answer every possible question. Outstanding issues include who qualifies as the relevant “owner” and how the provision operates where different parts of a bulk-metered development have different owners. The judgment also recognised that right-to-manage companies and other management arrangements may complicate the factual setting.

Accordingly, the decision establishes a clear rule for the central single-owner, multi-occupier situation, not a comprehensive allocation code for every complex ownership structure.

8. Complex Concepts Simplified

Deemed contract

A contract created by legislation even though the parties have not expressly agreed one. Here, it supplies a legal basis for charging for electricity supplied without an express agreement.

Bulk meter and sub-meter

A bulk meter records the combined electricity entering the supplied property. Downstream sub-meters can record how much particular units or areas use, supporting internal allocation of the total cost.

Joint and several liability

Each liable person can be required to pay the entire debt, not just an individual share. The Court rejected an interpretation that would impose that exposure on unrelated tenants for the whole bulk supply.

Purposive interpretation

Reading statutory words in their legislative setting and in light of the objective they serve. It does not mean disregarding the text; it means recognising that context can give a word a specialised meaning.

Ratio decidendi and obiter observation

The ratio is the legal reasoning necessary to decide the case. An obiter observation is an additional comment not needed for the outcome. The interpretation of paragraph 3(1) was decisive; the suggested alternative liability based on occupation of the basement was not.

Winding-up petition

An application seeking a company’s compulsory liquidation. This appeal determined the disputed statutory basis of the alleged debt and removed the lower-court orders; it did not itself order liquidation.

9. Conclusion

SmartestEnergy Business Ltd v Odeon Arcade Ltd establishes that physical occupation of individual units does not prevent owner liability under the deemed-contract provisions governing a common electricity supply. Where one bulk meter serves the relevant premises and no single occupier occupies their entirety, those premises are “unoccupied” for paragraph 3(1), placing deemed liability on the owner.

The judgment’s broader importance lies in its integration of statutory language, metering requirements and the commercial organisation of supply. It provides a coherent counterparty for bulk-supply debts while avoiding the unexpected imposition of an entire development’s electricity bill on individual tenants.