Expert Tooling and Automation Limited v Engie Power Limited: The Future of Commission Claims

Expert Tooling and Automation Limited v Engie Power Limited: The Future of Commission Claims

By -Published On: April 9, 2024-Categories: Business, Energy Consultants, Market Insight, News-

In a legal landscape reminiscent of waiting for a bus—where decisions on commercial energy broking were conspicuously absent—we suddenly witnessed a flurry of activity with three county court cases and one high court case emerging within a single year.

This surge culminated in a pivotal high court decision that has sent ripples through the sectors involved, particularly affecting brokers, suppliers, and the burgeoning industry of claims companies and law firms specialising in commission claims.

Background to the court cases

The absence of a high court decision as to whether customers were aware of commissions paid by a supplier to a broker did little to curb the aggressive expansion of claims companies.

Needless to say they relied only on the court cases that suited them.

These entities, along with certain law firms, saw a golden opportunity following the analogy drawn from mortgage broking disputes, particularly those cases from 2021 which had heralded a new avenue for claims.

County court cases: a mixed bag

Prior to the high court’s clarification, the legal landscape was marked by three county court decisions—two in 2023 siding with suppliers/brokers and one in 2024 favouring the customer.

These mixed outcomes underscored the inherent variability of county court judgments, which, while persuasive, are not binding.

This variability necessitated a high court intervention to establish a clear legal precedent concerning energy contract commission claims.

The facts of the case

His Honour Judge Saffman sat as a Judge of the High Court between:

Expert Tooling and Automation Limited Claimant and Engie Power Limited

The case revolved around Expert Tooling’s engagement with Utilitywise PLC, its broker, which facilitated the signing of five contracts from 2016 onwards, involving a total commission of £113,000.

Notably, the contracts alluded to the commission payments, albeit without drawing significant attention to them or disclosing the exact amounts.

Establishing a Clear Legal Precedent

The high court’s ruling brought a measure of clarity to the contentious issue of commission claims.

It was determined that a commercial energy customer is likely to be presumed to have known—or should have known—that a commission would be paid by a supplier to a broker.

This presumption challenges customers to justify any claim of ignorance regarding such payments.

The judgment confirms that ordinarily where the customer benefits from a broker’s services without direct payment, it is reasonable to infer that the broker would be compensated through commissions.

A customer will struggle to argue against this starting point when it wanted the benefit of a broker’s services and yet did not pay the broker for those services.

The court adopted a common-sense approach to this issue: can the customer really say that in these circumstances it thought the broker would be paid other than by commission?

What did the Judge say?

As the judge stated in referring to one of the customer’s managers who dealt with the contracts:

“He will have been aware that somebody must be paying (the broker) its commission. He had no reason to believe that the defendant would be funding that out of its own resources.”

Having such knowledge (or being treated as if it did have such knowledge) it was for the customer to ask as to the amount of that commission.

The commission was not hidden or otherwise somehow secret.

The payment of commission by a supplier to a broker is effectively said to be public knowledge as regards businesses.

Implications for the Six-Year Limitation Period

A point of frequent contention in commission claims involves the standard six-year limitation period for initiating legal action.

Contrary to the arguments presented by some claimants, the court reaffirmed that this period commences from the date the contract was signed, not from when the customer became aware (or claims to have become aware) of the commission payments.

This ruling effectively sets a precedent that may deter prolonged litigious pursuits based on delayed revelations of commission details.

The Broader Impact

Every case’s outcome depends on its own facts.

The provision and acknowledgment of commission payments, the degree of transparency between the parties, and the customer’s level of sophistication and vulnerability are all factors that courts will continue to evaluate on a case-by-case basis.

Moreover, this decision must cause the claims companies, claims law firms, funders, and legal cost insurers to completely reassess their involvement in commission claims.

Final Thoughts

Every case’s outcome depends on its own facts.

The provision and acknowledgment of commission payments, the degree of transparency between the parties, and the customer’s level of sophistication and vulnerability are all factors that courts will continue to evaluate on a case-by-case basis.

Moreover, this decision must cause the claims companies, claims law firms, funders, and legal cost insurers to completely reassess their involvement in commission claims.

In conclusion

The Expert Energy and Automation Limited v Engie Power Limited case is a significant development as regards the law of energy broking commission claims.

The high Court’s ruling provides clarity on customers’ awareness of commission payments to brokers and reaffirms the standard six-year limitation period for legal action initiation.

Moving forward, stakeholders can navigate this complex terrain with greater confidence, armed with the insights provided by this pivotal case.

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