Litigation Recent Decisions 22/10/96

Arguable case shown as to breach of supply agreement

National Power Plc v (1) United Gas Company Ltd and (2) Unilicorp United Inc.

CA (Leggatt LJ, Hobhouse LJ, Thorpe LJ) 15/10/96.

Summary: Appeal against summary judgment in respect of gas supply agreement allowed in part, trial judge's declarations as to meaning of "delivery point" in contract upheld.

Appeal by the defendants in the action from the decision of Tuckey J granting declaratory relief and summary judgment to the plaintiff, National Power. Both the appellants and the respondent were approved gas suppliers. By an agreement in January 1993 the respondent agreed to sell quantities of gas to the appellants at the British Gas terminal at Bacton, at a fixed price during a three-year term. The gas was delivered to Bacton through a sub-terminal controlled by Phillips, until December 1994, (by which time the market price of gas had dropped considerably), when the respondent purported to deliver gas under the agreement through a different sub-terminal. The appellants contended that the construction of the agreement did not permit delivery other than through a particular pipeline from the Phillips sub-terminal, and suspected that the December deliveries had not in fact taken place. When the respondent refused to supply information requested on the actual deliveries, on the basis that this was a generic contract, the appellants purported to terminate the contract with effect from 1 May 1995. The judge accepted that there were triable issues as to the December deliveries, but gave judgment for the respondent under RSC O.14A on the construction issue, held the refusal to supply information not to be a material breach, and rejected the appellants' claim that they were entitled to terminate the contract, limiting the amount of the appellants' set-off against the sum paid to the difference between the price paid and the market price at the time, as opposed to the contract price.