Energy commission claims: The story continues

Energy suppliers have in recent years been faced with a high number of energy commission claims alleging that secret commissions have been have paid to brokers or other intermediaries at the customer’s expense. Now, in a further victory for energy suppliers, Walker Morris has successfully defended the supplier defendant in Clayton House v ENGIE [1]. The ruling re-affirms the principles established by existing case law and compounds the growing body of decisions in favour of energy supplier defendants.

Walker Morris’ Energy Disputes team, which is led by Nick McQueen and includes Laura Singleton, Tayla Boote and Sean Gallagher, has successfully defended energy suppliers in several court cases [2], and most recently succeeded in the High Court in the case of Expert Tooling [3], which now represents the leading authority on business energy commission claims.

What happened in this case?

In Clayton House, the court rejected the claimant’s submission that the payment of the commission was ‘fully secret’, finding instead that the commission was half-secret on the basis that the broker terms and conditions, which were available to the claimant, set out that commission might be payable. For a claim to succeed in relation to a half-secret commission, it’s necessary for the claimant to show that (1) a fiduciary duty was owed, (2) the scope of duty included giving disclosure of the amount and model of commission, and (3) the claimant didn’t give its informed consent to the payment of the commission.

Whilst acknowledging that a fiduciary duty was owed by the broker to the claimant, the court found that informed consent to the commission had been given by the claimant. In particular, the court stressed that it would have expected the employee of the claimant who engaged the broker to read the broker terms and conditions and make appropriate enquiries with the broker. The court also rejected the submission that the claimant was unsophisticated or vulnerable, finding that the claimant company didn’t need to be a large business, nor was specialist knowledge of the energy market required to give informed consent to the commission. On that basis, the claim failed.

The ruling re-affirms the established principles of Medsted [4], applied in Dark Blue Pig, Leicester Indoor Bowls and Social Club, and Expert Tooling that commercial entities will often by their nature be considered to be  sophisticated and not vulnerable. It’s not necessary to show that the claimant knew the amount of the commission. It’s enough that the claimant knew or ought to have known that commission would be paid by the supplier.

Clayton House has further demonstrated the significant hurdles that business energy consumers must overcome to successfully bring an energy commission claim and should discourage potential claimants from pursuing ill-founded and spurious claims. Potential claimants, and their ATE insurers, should also note that, despite seemingly attractive ‘no win, no fee’ arrangements, they could potentially be liable for adverse costs orders against them which significantly outweigh the sums in dispute.

Energy commission claims: How we can support you

Nick McQueen and Walker Morris’ market leading Energy Disputes team have long-standing experience in advising on business energy disputes and regularly act for energy suppliers and generators in relation to high value and complex disputes in the energy industry.

Please contact Nick or Laura for more information or advice.

[1] Clayton House Care Limited v ENGIE Gas Limited, County Court (31 May 2024)

[2] The Dark Blue Pig Limited v ENGIE Power Limited, County Court (24 February 2023) and Leicester Indoor Bowls and Social Club Limited v Drax Energy Supply Limited, County Court (8 December 2023)

[3] Expert Tooling and Automation Limited v ENGIE Power Limited, [2024] EWHC 374 (Ch)

[4] Medsted Associates Limited v Cannacord Genuity Wealth (International) Limited, [2019] EWCA Civ 83