British Gas Trading Ltd v Shell UK Ltd & Anor

British Gas Trading Ltd v Shell UK Ltd & Anor

Clause 6.4(1) of the Principal Agreements requires Sellers to maintain the physical capacity to deliver 130% of the TRDQ from the Sole Pit Reservoirs themselves, and it is impermissible to count gas repaid under STACA towards this obligation. However, damages for breach are limited to the loss flowing from failure to maintain that capacity, and since British Gas received all nominated gas, no substantial loss was suffered.

Parties
Appellant: British Gas Trading Limited; First Respondent: Shell UK Limited; Second Respondent: Esso Exploration & Production UK Limited
Jurisdiction
England and Wales
Judgment Date
04 December 2020
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
appeal and cross-appeal both allowed; claim for damages fails except for nominal damages
Legal Topics
Interpretation of Contracts, Damages for Breach of Contract, Gas Supply Agreements, Variation of Contract Terms
Contract Law Commercial Law Interpretation of Contracts Damages for Breach of Contract Gas Supply Agreements Variation of Contract Terms

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Parties

British Gas Trading Limited

Appellant

Shell UK Limited

First Respondent

Esso Exploration & Production UK Limited

Second Respondent

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Proper construction of clause 6.4(1) of the Principal Agreements regarding delivery capacity obligation
  2. 2 Whether gas repaid under STACA can be counted towards delivery capacity from the Reservoirs
  3. 3 Assessment of damages for breach of the capacity obligation

Ratio Decidendi

Clause 6.4(1) of the Principal Agreements requires Sellers to maintain the physical capacity to deliver 130% of the TRDQ from the Sole Pit Reservoirs themselves, and it is impermissible to count gas repaid under STACA towards this obligation. However, damages for breach are limited to the loss flowing from failure to maintain that capacity, and since British Gas received all nominated gas, no substantial loss was suffered.

Court Disposition

appeal and cross-appeal both allowed; claim for damages fails except for nominal damages

Orders

  • Appeal allowed: clause 6.4(1) requires physical capacity from the Reservoirs only
  • Cross-appeal allowed: damages limited to nominal damages; no substantial loss recoverable by British Gas