Svella Connect Limited v Virgin Media Limited
| Judge | The Honourable Mr Justice Pepperall |
| Hearing | 19 and 20 May 2026 |
| Judgment | 26 August 2026 |
| Court | High Court of Justice, Business and Property Courts of England and Wales, Technology and Construction Court |
| Jurisdiction | England and Wales |
| Claimant | Svella Connect Limited, the framework contractor |
| Defendant | Virgin Media Limited, the client |
| Case reference | HT-2024-000414 |
| Applications | Virgin Media for summary judgment or strike out, 9 December 2025; Svella for permission to amend, 8 May 2026 |
Summary
Svella pleaded that duties of good faith were implied into three fibre network framework agreements and into the settlement that ended two of them. Virgin Media applied for summary judgment, saying a claimant must identify the gap and show necessity, and that agreements of over 200 pages which expressly promise no work leave no gap.
Summary judgment went to Virgin Media on both sets of implied terms. Whether a contract is relational was held not to be the question that decides implication. The question is whether the parties set their bargain out in their contract, and if not, whether the pleaded term is necessary or obvious.
Background and facts
Virgin Media extends fibre optic networks through contractors working under framework agreements, and since 2023 has provided network services to one customer, Nexfibre Networks Ltd. Work is allocated provisionally, then called down only if that customer approves it.
Three agreements were in issue, each made originally with NMCN plc: the Lightning Framework Agreement of 7 May 2019 and two Morpheus Framework Agreements of 14 February 2020. NMCN was placed into administration in October 2021 and the agreements were novated to Svella. Each was based on NEC standard terms, ran to over 200 pages, carried an obligation at clause 10.2 to act in a spirit of mutual trust and co-operation, and recited that no guarantee of work was given. Virgin Media could terminate at any time under clause 26.2, and either party for convenience under clause 26.2A.
The Exit & Settlement Agreement fixed the terms on which Svella ceased Morpheus services on 31 March 2025 and settled its disputed payment claims. Virgin Media applied on 9 December 2025 to dispose of claims for fraudulent misrepresentation, intimidation, causing loss by unlawful means, good faith and exemplary damages, and to strike out a Reply of 187 pages. Svella then gave up every claim but good faith.
The issue
Whether the pleaded implied terms of good faith had a real prospect of success, in fact or in law, and whether Svella should have permission to plead its new particulars of breach. Virgin Media said neither necessity nor obviousness had been attempted, and that an agreement made to end a relationship is poor ground for implying one into it. Svella said clause 10.2 showed a collaboration the parties had not legislated for.
The decision
The judge declined to let the relational label decide it.
The critical enquiry is not then whether the contract is relational but whether the parties' agreement has been fully set out in their contract and, if it has not, whether the pleaded terms should be implied.Mr Justice Pepperall, paragraph 83
The ordinary law of implied terms governed, with its usual limit.
the purpose of the implication of terms is to fill in the gaps left by the parties and not to rewrite their contractMr Justice Pepperall, paragraph 85
The express terms then answered the case. Virgin Media promised no work, could invite rival bids, and could bring the arrangement to an end at will.
The Framework Agreements were essentially the terms therefore on which Svella pre-qualified to compete for work without any guarantee that work would be awarded and upon terms that Virgin Media could terminate the agreements at will under clause 26.2 or for convenience under clause 26.2A.Mr Justice Pepperall, paragraph 93
Business efficacy and obviousness both failed, and Svella had not tried to identify any gap. The nine indicia drawn from the Post Office litigation were run through as a sense check rather than as a test, and gave the same answer. Implication in law failed on the same ground, necessity being the touchstone either way.
it is inherently unlikely that duties of good faith should be implied into a carefully negotiated settlement agreement intended to bring to an end a troubled contractual relationshipMr Justice Pepperall, paragraph 115
The one obligation said to need a good faith term, replacement volume if the customer rejected a build, was already an express obligation to use reasonable endeavours. Lest that conclusion were wrong, the judge went on to consider permission to amend and refused it for the new particulars of breach. Auditing, improvement plans and suspension were all provided for, each qualified by reasonableness.
There was, in my judgment, no gap in that detailed contractual scheme that required to be filled by some obligation that Virgin Media should act in good faith.Mr Justice Pepperall, paragraph 138
Summary judgment was granted on the good faith claims under both the framework agreements and the settlement, which made it unnecessary to take the strike out application further. Svella had permission to amend its second draft, apart from those new particulars of breach.
Practical implications
This is a ruling on a pleaded case at an interim stage, on the real prospect of success test, and not a finding after trial. The judge treated implication as a question of law on the terms and the admissible factual matrix, and held the case would not become stronger at trial.
Express collaboration wording works against the party seeking the implied term. Clause 10.2 already required the parties to act in a spirit of mutual trust and co-operation, which is part of why nothing further was needed. A contractor on an NEC based framework should not expect that clause to carry a wider unwritten duty.
Implication was assessed at the date of contracting, here the novations of October 2021. How long the arrangement in fact ran, and conversations in 2023 about its future, did not assist.
Practice points
- Identify the gap before pleading an implied duty of good faith, then plead why the term is necessary or obvious and formulate it precisely. Asserting that the contract is relational and reciting judicial descriptions of good faith did not survive this application.
- Treat an express mutual trust and co-operation clause as an obstacle to implication rather than a foundation for it. The parties have already provided for the ground it covers.
- Test the implication at the date of the contract or the novation. Evidence about how long the arrangement lasted, or what either side expected about renewal, was held irrelevant.
- Where the form lets one side terminate at will or for convenience and states that no work is guaranteed, expect that to defeat a case built on a long-term relationship and expectations of loyalty.
- Where the contract regulates performance management by a standard of reasonableness, plead breach of those express terms and claim relief for it. An allegation that a party intended to act, with no act pleaded and no relief sought, is not a complete cause of action.