Background
SmartestEnergy Business Limited supplied electricity through a single bulk meter to Odeon Arcade in Leicester. The supply served three tenanted retail units as well as the basement and communal areas. SmartestEnergy presented a winding-up petition against the arcade’s owner, Odeon Arcade Limited, claiming £106,914.25 for electricity supplied between July 2021 and April 2023 and continuing standing charges.
SmartestEnergy alleged that Odeon was liable under the deemed-contract provisions in paragraph 3(1) of Schedule 6 to the Electricity Act 1989. The first-instance insolvency judge dismissed the petition and restrained its advertisement because the retail units were occupied by tenants, meaning the premises were not “unoccupied” and no deemed contract arose with Odeon as owner. Cawson J upheld that decision on appeal.
The Court’s Holding
The Court of Appeal unanimously allowed SmartestEnergy’s appeal and set aside both lower-court orders. It held that, where electricity is supplied through a single bulk meter, the relevant “premises” under paragraph 3(1) are the whole land, building or structure served by that meter—not the individual tenanted units or merely the location of the meter.
Construed in light of the statutory scheme and the purpose of deemed contracts, premises are “unoccupied” for paragraph 3(1) if there is no single occupier of the entirety. Treating each tenant as a contracting party could make unrelated occupiers jointly and severally liable for the whole building’s electricity, despite the licensed supplier being able to measure only aggregate consumption. The more coherent result was a single deemed contract with the owner, which could arrange sub-metering or recover appropriate costs from occupiers. Odeon was therefore indebted to SmartestEnergy as alleged in the winding-up petition.
Key Takeaways
- For a licensed electricity supply measured by one bulk meter, the relevant premises are ordinarily the entire property served by that meter.
- Multi-occupied premises are “unoccupied” for purposes of paragraph 3(1) when no single occupier occupies the entirety and uses the whole licensed supply.
- In that situation, the owner is the party to the deemed supply contract, avoiding joint and several liability for individual tenants who consume only portions of the supply.
Why It Matters
The decision clarifies how the Electricity Act’s deemed-contract regime applies to shopping arcades, blocks of flats, commercial buildings, holiday parks and other multi-occupied properties served by a single licensed supply. Liability turns on the property served by the bulk meter and whether one person occupies the whole, rather than on the ordinary observation that portions of the property are physically occupied.
Landlords and property owners may consequently bear direct liability to licensed suppliers when an express bulk-supply contract is absent, even though tenants consume much of the electricity. Owners should ensure that supply contracts, sub-metering and lawful cost-recovery arrangements are in place.