SmartestEnergy Business Ltd v Odeon Arcade Ltd

Factual and Procedural Background

The Appellant, a licensed electricity supplier, presented a winding-up petition against the Respondent for £106,914.25 allegedly owed for electricity supplied to three retail units within a shopping arcade between 13 July 2021 and 30 April 2023, together with ongoing standing charges. [1][2]

The electricity was supplied through a single bulk meter in a basement serving the retail units, the basement and communal areas. Sub-meters appeared to serve individual units and communal areas, although the court made no finding as to who installed them. [3][4]

The Respondent disputed liability, arguing that the relevant units were occupied by tenants and that no deemed contract therefore arose between the Respondent and the Appellant under paragraph 3(1) of Schedule 6 to the Electricity Act 1989. [5]

The ICC Judge restrained advertisement of and dismissed the winding-up petition. The High Court dismissed the Appellant’s appeal. The Court of Appeal subsequently considered the Appellant’s challenge to both decisions. [6][7][8][9]

Legal Issues Presented

1. Whether, for the purposes of paragraph 3(1) of the Electricity Code in Schedule 6 to the Electricity Act 1989, premises supplied through a single bulk meter are “unoccupied” where separate parts are occupied by multiple tenants. [10][11][12]
2. Whether the deemed contract was with the Respondent as owner, with the individual occupiers, or with the occupiers jointly and severally. [13][14][15][16]

Arguments of the Parties

Appellant’s Arguments

• Premises are “unoccupied” unless the entire premises supplied have a single occupier; this includes premises divided among multiple unrelated occupiers. [17]
• The Respondent, as owner, was therefore deemed to have contracted with the Appellant and was liable for the electricity supplied. [17]

Respondent’s Arguments

• Where premises have multiple unconnected occupiers, those occupiers—not the owner—are liable under paragraph 3(1) of the Electricity Code. [18]
• The decisions of the lower courts should therefore be upheld. [18]

Intervener’s Arguments

• The Intervener advanced an alternative analysis: the owner remained the occupier of the premises served by the bulk meter, while electricity was resupplied to tenants under the statutory exemption regime. [19][20][21][22][23]
• On that approach, the owner alone was party to the deemed contract with the licensed supplier and could recover its costs from tenants subject to regulatory obligations. [24][25]

Table of Precedents Cited

Court’s Reasoning and Analysis

The Court began with the statutory purpose of deemed contracts: ensuring continuity of electricity supply and providing suppliers with a binding basis for charging where no express contract exists. [32][33][34]

It held that “premises” naturally referred to the whole land, building or structure receiving electricity through the bulk meter, rather than individual units or merely the location of the meter. The statutory metering provisions reinforced that conclusion because a meter may be outside the customer’s premises and, where there is only one approved meter, the supplier can measure only total consumption. [35][36][37][38][39][40][41]

The Court rejected the approach that individual tenants were separately liable for their own units, because the relevant premises were the entirety of the property served by the bulk meter. [42][43][44]

It also rejected a single contract with all occupiers subject to an implied limitation based on individual consumption. That approach would create difficult apportionment issues and conflict with the statutory reliance on meters to determine usage. [45][46][47]

The alternative that all occupiers were jointly and severally liable for the entire supply was considered legally and practically unattractive. Tenants could thereby become liable for electricity consumed throughout the building, despite the legislation not making that consequence sufficiently clear. [48][49]

The Court considered that assigning deemed liability to the owner was rational because the owner could ordinarily identify the areas served, know who occupied them, and arrange for separate payment, including through sub-meters. [50][51]

The Court also considered related provisions concerning meter access, disconnection and notice. Those provisions did not compel a different interpretation, since requiring notice to every occupier could be impractical where a supplier dealt with a bulk meter controlled by the owner. [52][53][54][55][56]

Giving “unoccupied” its ordinary meaning would produce difficulties in a multi-occupied building. In light of the context and purpose of paragraph 3(1), the Court concluded that premises are “unoccupied” where there is no single occupier of the entirety. [57][58][59]

The Court noted that the evidence also suggested the Respondent occupied the basement containing the bulk meter and possibly the arcade walkway, meaning that the Respondent might have been liable under the alternative arguments as well. This point was not necessary to the decision. [59]

Holding and Implications

The appeal was allowed. The orders of the High Court Judge and the ICC Judge were set aside. [60][61]

The Court held that, where electricity is supplied through a single bulk meter to premises containing multiple separate occupiers, the premises are “unoccupied” for paragraph 3(1) purposes if there is no single occupier of the whole. The owner may therefore be the party deemed to have contracted with the electricity supplier. [58][59]

The direct consequence was that the Respondent was indebted to the Appellant as alleged in the winding-up petition. [59]