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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Southern Gas Networks Plc v Thames Water Utilities Ltd  EWCA Civ 33 (25 January 2018)
Cite as:  WLR(D) 76,  EWCA Civ 33,  2 All ER 717,  WLR 5977,  1 WLR 5977
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ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION (TECHNOLOGY AND CONSTRUCTION COURT))
MARTIN BOWDERY QC SITTING AS A DEPUTY HIGH COURT JUDGE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE UNDERHILL
LORD JUSTICE HICKINBOTTOM
| SOUTHERN GAS NETWORKS PLC
|- and -
THAMES WATER UTILITIES LIMITED
Andrew Rigney QC (instructed by Clyde & Co LLP) for the Respondent
Hearing dates: 13-14 December 2017
Crown Copyright ©
Lord Justice Hickinbottom:
"If a gas transporter fails to meet a prescribed standard, he shall make to any customer or potential customer of a gas supplier who is affected by the failure and is of a prescribed description such compensation as may be determined by or under the regulations."
"They prescribe the sum which gas suppliers or gas transporters must pay to a customer by way of compensation for failure to meet specified standards of performance in respect of the services to be provided by such suppliers or distributors…".
"(1) Where an escape of water, however caused, from a pipe vested in a water undertaker causes loss or damage, the undertaker shall be liable, except as otherwise provided in this section, for the loss or damage.
(2) A water undertaker shall not incur any liability under subsection (1) above if the escape was due wholly to the fault of the person who sustained the loss or damage or of any servant, agent or contractor of his.
(3) A water undertaker shall not incur any liability under subsection (1) above in respect of any loss or damage for which the undertaker would not be liable apart from that subsection and which is sustained—
(d) by any person on whom a right to compensation is conferred by section 82 of the New Roads and Street Works Act 1991 ["the NRSW Act"].
(4) The Law Reform (Contributory Negligence) Act 1945… shall apply in relation to any loss or damage for which a water undertaker is liable under this section, but which is not due to the undertaker's fault, as if it were due to its fault."
"(1) An undertaker shall compensate—
(a) the street authority or any other relevant authority in respect of any damage or loss suffered by the authority in their capacity as such, and
(b) any other person having apparatus in the street in respect of any expenses reasonably incurred in making good damage to that apparatus,
as a result of the execution by the undertaker of street works or any event of a kind mentioned in sub-section (2).
(2) The events referred to in sub-section (1) are any explosion, ignition, discharge or other event occurring to gas, electricity, water or any other thing required for the purposes of a supply or service afforded by an undertaker which—
(a) at the time of or immediately before the event in question was in apparatus of the undertaker in the street, or
(b) had been in such apparatus before that event and had escaped there from in circumstances which contributed to its occurrence.
(3) The liability of an undertaker under this section arises—
(a) whether or not the damage or loss is attributable to negligence on his part or on the part of any person for whom he is responsible, and
(b) notwithstanding that he is acting in pursuance of a statutory duty.
(4) However, his liability under this section does not extend to damage or loss which is attributable to misconduct or negligence on the part of—
(a) the person suffering the damage or loss, or any person for whom he is responsible, or
(b) a third party, that is, a person for whom neither the undertaker nor the person suffering the damage or loss is responsible.
(5) For the purposes of this section the persons for whom a person is responsible are his contractors and any person in his employ or that of his contractors.
(6) Nothing in this section shall be taken as exonerating an undertaker from any liability to which he would otherwise be subject."
In this judgment, references to "section 82" are to section 82 of the NRSW Act.
Ground 1: The Statutory Claim
Ground 2: The Claim in Negligence
Ouster by Section 82
i) If a claim in negligence were to be maintained, that would be contrary to the purpose of the Act. As he put it (in ): "[The NRSW Act] was clearly intended to replace actions in negligence or in trespass to goods, where what is alleged is simply damage by one utility to the equipment of another in the course of working on its own equipment".
ii) If a claim in negligence were to be maintained, then the absolute statutory defence in section 82(4) would be circumvented, and replaced by a claim for contributory negligence (which, in effect, would be no more than a partial defence). For example, in that case, if Yorkshire Electricity having to cut the ducting around the Telewest cables was the result of Telewest's own negligence, Yorkshire Electricity would have a complete defence to a section 82 claim under section 82(4), but only a claim for contributory negligence in a claim against it in negligence. The existence of the section 82(4) defence to a claim under the statute is therefore inconsistent with an intention to retain the right to make a common law claim.
"5. By section 82(1)(b) of the Act an undertaker shall compensate any other person having apparatus in the street in respect of any expense reasonably incurred in making good damage to that apparatus as a result of the execution by the undertaker of street works. That section imposes strict or absolute liability on the undertaker, a provision that is reinforced by section 82(3)(a) which provides in terms that the liability arises whether or not the damage or loss is attributable to negligence on his part or the part of any person for whom he is responsible. The only relief for the undertaker is found in section 82(4), which provides that his liability under section 82 does not extend to damage or loss which is "attributable to" misconduct or negligence on the part of any third party; or of the person suffering the damage or loss or any person for whom that person is responsible.
6. To dispose of an issue that was raised before us, though not in the event affecting the outcome of any particular case, we are satisfied that these provisions form a complete code, excluding the operation of the common law, in respect of the subject-matter that they address, the execution of street works under the authority of statute or of a licence. It would be very odd if Parliament had provided relief based on strict liability, but with a specific exemption, if it intended the common law of negligence nonetheless to continue in parallel with that scheme. That view is not displaced by section 82(6), providing that the section does not exonerate an undertaker "from any liability to which he would otherwise be subject". That saving, as Mr Cousins QC [Leading Counsel for Yorkshire Electricity] argued, is in the nature of the avoidance of doubt, and is directed at liability to third parties other than those listed as benefiting from the imposition of strict liability. If the draftsman had intended to say that the imposition of statutory liability between particular parties was without prejudice to rights of action at common law between those parties he had at his disposal much clearer and more direct ways of expressing himself."
"The judge thought, we would respectfully think correctly, that the provision that there should be recovery even in a case where there had been no 'economic' (i.e. financial) loss showed that the statutory scheme was different from, and intended to replace, the common law."
i) Mr Rigney referred to a line of House of Lords/Supreme Court cases, ending with CPAG, but including Johnson v Unisys Limited  UKHL 13;  1 AC 518 and Marcic v Thames Water Utilities Limited  UKHL 66;  2 AC 42, and the tax cases Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners  UKHL 49;  1 AC 558, Revenue and Customs Commissioners v Total Network SL  UKHL 19;  1 AC 1174 and Monro v Revenue and Customs Commissioners  EWCA Civ 306;  Ch 69; and also two more recent decisions of the Supreme Court (Investment Trust Companies v Revenue and Customs Commissioners  UKSC 29;  2 WLR 1200 and Littlewoods Limited v Revenue and Customs Commissioners  UKSC 70;  3 WLR 1401). He submitted that these cases provided authority for the proposition that, where a statute provides an express remedy in relation to events or circumstances which is inconsistent with or more limited than a remedy provided in respect of those events or circumstances at common law, the common law remedy will be excluded because Parliament, by providing for the remedy it has, will have evinced the intention to exclude any other remedy.
ii) In section 82 of the NRSW Act, Parliament gives a person with apparatus in a street a remedy against an undertaker where there was a section 82(2) event in respect of the undertaker's concern, including a discharge, which damaged that apparatus. That remedy is restricted to compensation for "expenses reasonably incurred in making good damage". That is more limited than the remedy provided in respect of those events at common law. Therefore, on the principle derived from the authorities, the common law remedy is excluded.
iii) As Buxton LJ indicated in Yorkshire Electricity at , quoted at paragraph 33 above, the fact that recovery under section 82(1)(b) is possible even where there the owner of the street apparatus has suffered no financial loss is also an indication that it is intended to replace remedies at common law.
iv) That is also in line with the purpose of section 82, which, by granting a limited remedy but on a strict liability basis, is designed to avoid consideration of issues of negligence. That is underscored in section 82(3), which provides that liability of an undertaker under section 82 arises "whether or not the damage or loss is attributable to negligence on his [i.e. the undertaker's] part…".
v) Section 82(4) provides that liability does not arise if the damage or loss is attributable to misconduct or negligence on the part of the person suffering the loss or damage (or anyone for whom he is responsible), or a third party. That provides a complete defence. Consequently, where the damage or loss is attributable to negligence on the part of the victim, principles of contributory negligence will not apply. I pause there to note that this differs from section 209 of the WI Act (quoted at paragraph 8 above), under which the application of contributory negligence is expressly reserved by section 209(4). Mr Rigney submitted that to grant a statutory remedy with a complete defence in these circumstances is inconsistent with allowing an alternative common law remedy subject only to the principles of contributory negligence.
vi) Section 82(6) is not directed at all to liability of the undertaker to street authorities and other persons with the street apparatus, but only towards the undertaker's liability to third parties. It is included for the avoidance of doubt. That was Buxton LJ's view. The Deputy Judge in this case concluded that that is the unambiguous meaning of section 82(6), such that any excursion into the background of the provision is unnecessary.
vii) However, Mr Rigney submitted, such an excursion would not assist Southern Gas, because the predecessors to section 82, unlike section 82 itself, expressly included non-exoneration provisions in relation to liabilities between the parties to which the sections applied.
viii) That underlines the point made by Buxton LJ in Yorkshire Electricity at , that, if the draftsman of section 82 had wished to preserve common law remedies as between the parties identified in section 82(1), "he had at his disposal much clearer and more direct ways" of doing so (as used by the draftsmen of the predecessors to section 82).
ix) Standard textbooks in the area quote Yorkshire Electricity for the proposition that section 82 forms a complete code excluding the operation of the common law, without demur (see, e.g., paragraph 3-2020 of the Encyclopaedia of Highway Law and Practice (2017), and paragraph 17-74 (especially footnote 4) of Cross on Local Government Law (9th Edition) (2017)).
x) The decision of the Sheriff of Tayside, Central and Fife in Scotland Gas Networks Plc v Scottish Water  Scot SC 195 does not undermine this analysis. That case proceeded on the basis of a consensus between counsel that Yorkshire Electricity was wrong to consider that section 82 ousted common law rights; and so the issue was not fully argued. That consensus was – and, insofar as the Sheriff's decision runs contrary to Yorkshire Electricity on this issue, it is – wrong; and the analysis and conclusion of Buxton LJ in Yorkshire Electricity were right.
i) Where Parliament has legislated for a statutory remedy to apply in certain circumstances, whether that remedy ousts any common law remedy which would or might have arisen on the same facts depends upon whether, on the true construction of the particular statutory provisions, Parliament intended that provision to oust, or co-exist with, the common law remedy. The courts will not maintain a common law remedy in the case of an evident intention of Parliament to displace it (see, e.g., Johnson v Unisys at  per Lord Hoffmann and  per Lord Millet, Deutsche Morgan Grenfell at  per Lord Hoffmann, and CPAG at  per Sir John Dyson JSC).
ii) Where that intention is not express, the threshold for inferring ouster of common law rights is high; but it is not helpful to approach the question on the basis that there is a presumption against ouster. Nor, before common law rights are displaced, does ouster have to be a necessary implication, in the sense that the common law remedy is only displaced if, as a matter of logic, it cannot co-exist with the statutory regime (although, of course, common law remedies can be ousted by such necessary implication) (CPAG at  per Sir John Dyson).
iii) Whether common law remedies are ousted is dependent upon the true construction of the particular statutory provisions. However, where the statutory remedy covers precisely the same ground as the common law remedy, the latter will almost certainly have been excluded by necessary implication (ibid at ). Furthermore, where the statutory regime provides a special or qualified remedy, it may (although not necessarily will) be inferred that Parliament intended to exclude any common law remedy that would or might arise on the same facts (see, e.g., Deutsche Morgan Grenfell at  per Lord Hoffmann, and at  per Lord Walker of Gestingthorpe).
iv) The identification of some differences between the statutory scheme and the common law remedy will not necessarily lead to an inference that Parliament intended the former to oust the latter. As Sir John Dyson put it in CPAG at :
"The question is not whether there are any differences between the common law remedy and the statutory scheme. There may well be differences. The question is whether the differences are so substantial that they demonstrate that Parliament could not have intended the common law remedy to survive the introduction of the statutory scheme. The court should not be too ready to find that a common law remedy has been displaced by a statutory one, not least because it is always open to Parliament to make the position clear by stating explicitly whether the statute is intended to be exhaustive. The mere fact that there are some differences between the common law and the statutory positions is unlikely to be sufficient unless they are substantial…. The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended by [sic] coexist with it." (emphasis in the original).
Rather than "incompatible", in Total Network at  Lord Mance used the phrase "positively inconsistent".
"Nothing in this section shall be taken as exonerating an undertaker from any liability to which he would otherwise be subject."
In my view, on its face, this expressly retains any liability an undertaker might have over and above its liability under the strict liability provisions of section 82.
"… [T]he preceding provisions of this section shall not exonerate undertakers from any liability to which they are subject apart from the preceding provisions of this section, whether to a street authority or street managers, to a bridge authority or managers or to any other person."
It is noteworthy that this provision expressly stated that the statutory compensation remedy available to street and bridge authorities or managers under section 18 did not exonerate an undertaker from any liability "to any other person". Section 19(3) was in materially identical terms. Section 26(7) was in different terms – but with an identical effect (see Yorkshire Electricity Board v British Telecommunications plc  1 WLR 1029 at page 1036C per Lord Bridge of Harwich with whom the rest of the Appeal Committee agreed) – namely:
"Obligations and liabilities imposed on operating undertakers by the preceding provisions of this section shall be in addition to, and not in substitution for, obligations and liabilities to which they are subject apart from those provisions…".
Ouster in the context of the broader scheme
"These specific references make it unlikely that Parliament intended other duties, where there is no such reference, to give rise to similar rights."
He went on to say (in ) that he considered the provisions of the two water statutes to constitute an elaborate "regulatory code" analogous to the social welfare legislation reviewed in X (Minors) v Bedfordshire County Council  2 AC 633, and that the expectation, in the absence of any indication to the contrary, is that such a code is enforceable in public, not private, law.
"(a) to provide, improve and extend such a system of public sewers (whether inside its area or elsewhere), and so to cleanse and maintain those sewers… as to ensure that that area is and continues to be effectually drained; and
(b) to make provision for the emptying of those sewers and further provision (whether inside its area of elsewhere) as is necessary from time to time for effectually dealing, by means of sewage disposal works or otherwise, with the contents of those sewers"
That duty, like the duty with regard to water supply under section 31, shall be enforceable under section 18 (section 94(3)).
Lord Justice Underhill:
Lord Justice Jackson: