Court of Appeal: when a block's landlord electricity supply is out of contract, the owner pays
On 4 November 2026 the Court of Appeal ruled that where one licensed supply serves a building with several occupiers and no contract is in place, the supplier's deemed contract is with the owner. The judges gave blocks of flats as an example. Here is what it means for block companies.
What happened
On 4 November 2026 the Court of Appeal gave judgment in SmartestEnergy Business Ltd v Odeon Arcade Ltd [2026] EWCA Civ 1412. Lord Justice Newey gave the main judgment, and Lady Justice Falk and Lord Justice Fancourt agreed.
The case was about a shopping arcade in Leicester supplied through a single bulk meter in the basement, with sub-meters behind it for the shops and the common parts. The supplier said it was owed £106,914.25 for electricity supplied between July 2021 and April 2023 when there was no contract, and presented a winding-up petition against the owner. The owner said the shops were let and occupied, so it was not liable. Two lower courts agreed with the owner.
The Court of Appeal disagreed and allowed the appeal. Paragraph 3(1) of the Electricity Code in the Electricity Act 1989 says that where a supplier supplies premises without a contract, it is deemed to have contracted “with the occupier (or the owner if the premises are unoccupied)”. The court held that premises are “unoccupied” for this purpose “if there is no single occupier of the entirety”. So where one supply serves a building with several separate occupiers, the deemed contract is with the owner.
The judges used blocks of flats to test the point. Lord Justice Newey said residents in a block on one bulk meter “would surely be horrified” to be told they were each liable for the whole block’s electricity. Lord Justice Fancourt said that for blocks of flats with a single supply that is sub-metered or paid through the service charge, it makes sense that the landlord, or a new landlord, “is deemed liable to pay for any interim supply, pending a new express contract”.
The decision is in force now as the law in England and Wales, subject to any further appeal.
What it means for your building
Most blocks have a landlord supply: the meter for hallway lights, door entry, the lift, the fire alarm and sometimes a communal boiler or the car park. In some older buildings the flats themselves are fed from one bulk supply. After this judgment, if that supply runs without an agreed contract, the supplier can look to the owner for the whole bill, at deemed contract prices, even though residents use the electricity.
That gap happens more often than boards expect:
- when residents buy the freehold or the company takes over from a previous landlord, and the old contract ends or is not transferred;
- when a managing agent leaves and nobody renews the contracts it arranged;
- when a fixed term ends and nobody notices.
The court also noted that the owner can expect to recover usage through sub-meters or the service charge. Where flats are recharged for electricity, Ofgem’s maximum resale price rule applies (see our guide to recharging electricity), and service charge recovery depends on what the lease allows.
This is general information about a judgment, not legal advice. If a supplier is pressing your company for a large deemed contract bill, take advice before you pay or dispute it.
What to do now
- List every meter in the building’s common parts and plant rooms, with its supplier, contract end date and whose name it is in.
- Check each landlord supply has an agreed contract in the company’s name. If one is on deemed or out of contract rates, get quotes and agree a contract now.
- After a freehold purchase, RTM takeover or change of agent, make moving the energy contracts part of the handover checklist.
- If flats are fed from a bulk supply, write down how their usage is measured and recharged, and keep the supplier’s bills.
- If the company holds a large backdated bill, ask the supplier for the meter readings, the dates and the tariff used.
How Freeholdpilot helps
Freeholdpilot’s directors’ portal keeps supply contracts and bills in the building’s document drive and holds the service charge budget, so the board can see whose name each supply is in and when it ends.
Questions
What is a deemed contract?
When a licensed supplier supplies electricity to premises without an agreed contract, for example after a contract ends or a property changes hands, the law treats a contract as existing so the supplier can charge for it. Deemed contract prices are usually higher than agreed ones.
Does this mean our company owes for electricity the flats used?
Only for a supply that comes through the building's own licensed meter. Flats with their own meters and their own supply contracts are not affected. Where a single bulk supply feeds the flats, the judgment says the owner is liable to the supplier and recovers costs from occupiers through sub-meters or the service charge, depending on the lease.
We are an RTM company, not the freeholder. Does this apply to us?
The judgment speaks of the owner, and the court said there could be questions about who counts as the owner in some buildings. If your RTM company holds the landlord supply contract, keep it in date so the question never arises, and take advice if a supplier says you are liable.
Where does this apply?
The Court of Appeal's decision binds courts in England and Wales. The Electricity Act 1989 provision applies in Great Britain. Northern Ireland has its own law.
Sources
This is general information about the law in England and Wales unless it says otherwise, not legal advice for your building. For advice, speak to a solicitor or ask us to introduce one of our partner firms. How we write the news · Report a mistake
