A leading energy litigation firm has won a notable case against an energy broker who was trying to recover lost commission from a small business.
The ruling, believed to be the first of its kind in the nation, was aimed at protecting businesses from malicious intimidation by energy brokers who seek to “pressure” them into entering into questionable contracts.
Energy Solicitors Ltd (ESL) acted for Cambridge-based property management company Petro's Handyman Service in a case brought by energy broker Utility Savings Group Ltd. The case, heard at Cambridge County Court, related to lost fees amounting to £3,930.58 after the energy broker claimed to have secured three energy contracts for a small business.
Even though the deal did not go ahead because other contracts had been signed, the energy brokers continued to insist that they were entitled to the commission they would have received had the deal gone ahead. Petro said it felt “pressured” by the contract the brokers offered it.
The broker argued that the loss was caused by a customer default due to the contract not being performed, but ESL argued that because the contract was not performed, there was no customer default in the first place, and the agreement of a substitute contract did not amount to a customer default.
In this case, the contract offered by Utility Savings Group Ltd was not executed and despite having a signed power of attorney from Petro's Handyman Service, the broker was unable to cancel the existing contract on their behalf.
The Cambridge County Court ruled in favor of Petro's handyman services and dismissed the energy brokers' claims. It found that there was no default on the part of the customers and that the brokers' losses were not a direct result of Petro's acts or omissions. Moreover, it was impossible for the brokers to prove the financial losses they claimed to have suffered, since the fees requested as compensation were based on future losses and therefore could only be calculated on estimated usage.
Another element of the broker's loss was the levy of VAT on top of the commission, but ESL argued that if the contract was valid it would not have had to pay VAT on top of the commission. The judge found that even if there had been a breach by its client (which there was not in this case), there was no evidence to show that Petro was liable for VAT.
Victoria Myers, senior partner at Energy Solicitors Ltd, said: “We are extremely pleased with the Cambridge County Court's ruling. It is not uncommon for energy brokers to resort to legal tactics to intimidate small businesses in order to recoup lost commission and the Petro's Handyman Service case is just one of many examples.”
“Today's energy broker market is largely unregulated. This, combined with the complexity of the industry and a lack of clarity for consumers about what they are paying for, creates space for exploitative business practices that have a negative impact on companies.”
Commenting on the incident, Petro Kurinich, owner of Petro's Handyman Services, said: “As a small business owner, it was really unsettling to receive a legal notice from an energy broker. The demands and threats for fees were a pressure we didn't need on top of rising energy costs.”
“We are not the only small business in this situation and we are extremely grateful to Energy Solicitors for supporting us through this matter. Their expertise and industry knowledge was extremely helpful in helping us achieve the outcome we wanted.”
Energy Solicitors Ltd is a leading specialist energy litigation law firm. With a deep understanding of the energy sector and expertise in the legal claims process, we support, advise and assist businesses dealing with the legal issues arising from energy market fragmentation.