Andrew Brown, instructed by Fraser Ritson and Aziz Abdul of Addleshaw Goddard, successfully represented the liquidators of Contract Natural Gas Limited, Joshua Dwyer and Will Wright of Interpath, in the recent High Court decision of Contract Natural Gas (in liquidation) v Zog Energy Limited (in liquidation) EWHC 86 (Ch) in which Andrew Twigger KC, sitting as a deputy, considered duelling appeals against rejections of proofs of debt totalling c£16million, and gave the first post-Enterprise Act 2002 judgment on the effect of administration on limitation.
On 14 November 2024, Andrew Twigger KC considered applications between Contract Natural Gas Ltd (‘CNG’) and Zog Energy Ltd (‘ZOG’), both in liquidation, challenging the rejection of proofs. CNG, a wholesale gas supplier, had supplied gas to ZOG under a master services agreement (‘the MSA’), who in turn supplied to individual consumers. The MSA contained various limitation clauses, such as limiting sums due by CNG to £250,000 and a contractual time-bar of 12-months. Both companies entered administration in late-2021. CNG submitted a proof of debt for c.£1.4million, and ZOG submitted a proof for c.£14million in liquidated damages. In late-2023, CNG admitted ZOG’s proof for £250,000 (capped by the limitation clause), while ZOG rejected CNG’s proof in full relying on the contractual time bar.
Andrew acted for the liquidators of CNG, and made submissions on contractual interpretation of the MSA, but also that time ceased running upon entry of ZOG into administration on the basis that the nature of administration had changed per the Enterprise Act 2002 to include a distribution process – there being no case law on this in 20-years and some textbooks suggesting in principle the law had changed.
On 21 January 2025: Andrew Twigger KC handed down judgment that held the following:
-CNG’s interpretation of the total liability limitation clause was correct, and ZOG’s debt was properly admitted at the value of £250,000.
-No statutory trust arose upon the commencement of administrations, time did not cease to run, and CNG’s debt was partially time-barred under the contractual time-bar;
-Time did cease running upon entry into CVL as a statutory trust arose at that point, so CNG’s invoices (in part) were not time-barred;
-A statement of affairs acknowledging a debt does not act to extend time for limitation in respect to contractual time bars;
-While time-barred, the contractual time-bar did not remove ZOG’s liability to CNG for its invoices, and CNG could rely on a set-off for these sums against ZOG’s admitted debt.
This judgment confirms the rule on limitation for old style administrations extends to new style administrations, and provides a useful guide for practitioners about when limitation might cease to run.
Read the full judgment here.
