Landlord and tenant – Park homes – Electricity charges – Written statement requiring appellant occupiers to pay for electricity supplied by respondent park owner – No term fixing price of supply – Parties disagreeing over price – First-tier Tribunal determining application of average unit rate for electricity unreasonable but respondent entitled to contribution to climate change levy – Whether FTT erring in law – Appeal allowed
Port Werburgh Marina was a residential and leisure marina on the north bank of the River Medway in Kent. Part of the marina complex comprised a mobile home park which was a protected site to which the Mobile Homes Act 1983 applied. An issue arose concerning charges for electricity supplied by the owner of the marina to the permanent residents of the park.
The appellants were all members of the residents’ association and between them they owned 13 permanent mobile homes situated on pitches on the park. Each appellant occupied their pitch under an agreement made between them and the respondent, which owned the marina. The 1983 Act applied to each of the agreements.
The appellants applied to the First-tier Tribunal under section 4 of the 1983 Act for the determination of an issue concerning charges for electricity supplied to the appellants by the respondent.
The FTT determined that it was not reasonable for the respondent to recharge electricity to the appellants using the average unit rate for each billing period as that did not take account of the mixed use of the site. Furthermore, the rate would have to be recalculated in every billing period, making it impossible to charge a consistent rate for electricity, which could not be reasonable. A sample electricity bill showed that 51% of the electricity consumed was charged at weekday rates, 29% at night rates and 20% at weekend rates. However, there was no evidence to demonstrate whether the split between those three rates was typical of other monthly bills.
The FTT also decided that the respondent was entitled to pass on a share of the climate change levy (CCL) to the appellants. The appellants appealed.
Held: The appeal was allowed.
(1) It was absolutely clear that CCL was not payable by domestic consumers and should not be passed on to them by resellers. The consequence of the levy applying to business consumers was that it applied to the respondent. It was the respondent’s liability to pay CCL (and its ability to pass it on to its own customers) which was in issue. In the present case, the reason why the charge had not been reasonably incurred was that the levy was not payable by residential consumers: MacGregor v BM Samuels Finance Group plc [2013] UKUT 471 (LC) and East Tower Apartments Ltd v No 1 West India Quay (Residential) Ltd [2016] UKUT 553 (LC); [2017] PLSCS 5 considered.
HMRC’s Excise Note CCL1/3 also explained that where supplies were made to a customer whose premises were put partly to domestic use, the whole supply could be treated as domestic if the domestic use was at least 60% of the total. If the domestic use was less than 60% of the total the main rate of CCL had to be applied to that portion that did not qualify for relief.
Therefore, CCL ought not to have been taken into account in determining the charges for electricity supplied by the respondent to the appellants.
(2) As regards the unit price, the Ofgem Guidance stated that the maximum price at which gas or electricity could be resold was the same price as was paid by the reseller, including any standing charges. However, the relationship between the appellants, as occupiers of their pitches, and the respondent was contractual. The contract between them was the written statement which included the terms implied into every such agreement by the 1983 Act. The Ofgem Guidance was not part of that contract, although it was relevant to the parties’ relationship.
The implied terms in the contract required the occupier to pay “all sums due under the agreement” for electricity supplied by the owner of the protected site. Nothing in the agreement explained what those charges were to be, or how or by whom they were to be determined. That omission was not overcome by the Ofgem Guidance. In particular, it did not say that the price payable by the appellants was to be decided by the respondent.
Ofgem’s function in relation to resale pricing was determined by section 44(1) of the Electricity Act 1989. The guidance was a user-friendly summary of a direction under section 44(1) issued by Ofgem on 29 January 2002. The Ofgem direction, and the guidance based on it, fixed a ceiling, the maximum resale price, which a reseller of electricity or gas was not entitled to exceed. That limited but did not define the amount which a reseller like the respondent could charge.
(3) Where parties agreed that one would buy some commodity from the other, and from no one else, if they could not agree the price, English law would imply that the commodity would be sold at a reasonable price. On those normal contractual principles there had to be implied into the agreement between the parties a term that the price at which electricity would be resold by the respondent to the appellants would be a reasonable price, which, if not agreed, would be determined by the FTT under section 4 of the 1983 Act.
In this case, the FTT did not determine the price, as the appellants had requested. It accepted the respondent’s price on assertions that were not based on evidence. In particular, it approached the application on the basis that the supply to the park was primarily commercial. What mattered was the supply of electricity to the park, and to the other consumers who shared the same supply.
(4) The FTT’s reasons for rejecting an average unit charge was not justified on the evidence before it which suggested that the appellants were significant consumers of electricity relative to others served by the same supply. To calculate the charge payable by the appellants on the basis of the highest tariff was unreasonable and should be avoided if possible; on the information supplied by the electricity provider, it was possible fairly to calculate a charge which reflected usage at both the weekday and the lower weekend rate.
If the parties could not now agree appropriate charges, they would have to seek the assistance of the FTT. The appellants’ original application would be remitted to the FTT for further consideration.
The appellants appeared by their representative; Victoria Osler (instructed by Apps Legal Ltd) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of King and another v Residential Marine Ltd
