In Contract Natural GAS Limited (In Liquidation) v Zog Energy Limited (In Liquidation) [2025] EWHC 86 (Ch), the High Court considered whether changes to the administration regime, made by the Enterprise Act 2002[1], mean entry into administration pauses limitation in respect of claims against the company.

The court held that entry into administration does not create a statutory trust (as is the case in liquidation) and the limitation clock continues to run until such time as the company moves to liquidation. As such, even where a debtor has entered administration, creditors should remain mindful of limitation and, where necessary, take appropriate steps to protect their position.

Background

Contract Natural Gas Ltd (CNG) was an energy supply company. It supplied gas to various entities, including ZOG Energy Ltd (ZOG).

In 2013, CNG and ZOG entered into a master sales agreement (MSA), under which each supply of gas was deemed to be a separate contract, referred to in the MSA as a “Transaction”.

The MSA contained the following terms:

• 13.3 Subject to clause 13.9 the total liability of each party to the other and in respect of all claims arising under the matters set out in clause 13.1 shall not exceed the sum of £250,000.

• 13.5 The non-defaulting party shall only be entitled to bring a claim against the defaulting party where the non-defaulting party issues legal proceedings against CNG within the period of 12 months commencing on the date upon which ZOG ENERGY ought reasonably to have known of its entitlement to bring such a claim.

• 13.9 The limitation of liability set out in clause 13.3 shall not apply to any breach of ZOG ENERGY’s obligations under clauses 3 (exclusivity) or 10 (payment).

In December 2021, following the rise in global gas prices, both CNG and ZOG entered administration. In December 2022 and September 2023 respectively, both ZOG and CNG moved to creditors voluntary liquidation (CVL).

Claims

CNG submitted a proof of debt in ZOG’s administration in February 2022, for c.£1.4m in respect of 16 unpaid invoices relating to gas supplies up to the end of November 2021. After ZOG’s entry into CVL, ZOG’s liquidators rejected CNG’s proof on the basis that the claim was out of time under clause 13.5 of the MSA.

Meanwhile, with the (retrospective) consent of CNG’s administrators, ZOG issued proceedings against CNG in October 2022, seeking damages or liquidated damages of more than £10m for breach of contract, due to CNG’s failure to supply gas under the MSA from 30 November 2021. The parties agreed that the proceedings would be stayed indefinitely, with ZOG proving in CNG’s administration. ZOG submitted a proof of debt in August 2023 for c.£13m, later revised down to c.£10m. CNG’s liquidators subsequently admitted ZOG’s claim for £250,000 only, on the grounds that its claim was subject to the liability cap in clause 13.3 of the MSA. Furthermore, CNG said that the amount should be set off against CNG’s claim against ZOG, therefore reducing ZOG’s claim to zero.

CNG and ZOG issued separate applications under Rule 14.8 of the Insolvency (England and Wales) Rules 2016 (to challenge the other’s rejection of their proof of debt claims) and a hearing took place before Andrew Twigger K.C., sitting as a Deputy Judge of the High Court, in November 2024.

Judgment