Transco Plc v United Utilities Water Plc

A utility undertaking may owe another utility a duty of care where both operate infrastructure beneath the same streets and their activities may affect each other’s installations. Economic loss is not necessarily pure economic loss merely because no physical damage is caused to the apparatus. Direct negligent interference with a valve or pipe, causing interruption and consequential expenditure, may constitute damage or wrongful interference with property. Such loss may therefore be recoverable in negligence and trespass to goods. An undertaker carrying out street works may also be liable under section 82 of the New Road and Street Works Act 1991, although the recoverable amount remains a matter for assessment.

Transco operated the gas network and United Utilities Water operated water and wastewater networks. During street works, a United Utilities employee negligently closed a valve on Transco’s gas network, interrupting supply to about 2,600 customers. Transco claimed the costs of restoring supply, customer compensation and related expenses in negligence, trespass, conversion and under the New Road and Street Works Act 1991.

Following an order for a split trial, the High Court determined liability as a preliminary issue. The principal questions were whether the parties had a sufficiently proximate relationship, whether the claimed losses were irrecoverable pure economic loss, whether the conduct constituted trespass to goods, and whether statutory liability arose under section 82.

1. Negligence. The physical proximity of utility installations beneath the same streets, together with the known risk that works by one utility may affect another’s installations, created a special relationship of sufficient proximity. It was reasonable and proportionate to impose reciprocal duties of care between the utilities. The defendant admitted negligence, so liability in negligence was established for loss and damage proved.
2. Economic loss. The claim was not for financial loss merely consequential on interruption of a service. The defendant had directly interfered with the claimant’s property by closing the valve and rendering the pipeline inoperable. The reasoning in Spartan Steel v Martin & Co [1973] 1 QB 27 concerning financial loss from negligent interference with services was therefore distinguishable and not strictly applicable.
3. Trespass to goods. Wrongful interference with physical property may occur without direct physical damage to the pipe or valve. Closing an open valve, stopping the flow of gas and rendering the pipe inoperable constituted wrongful interference with the claimant’s property and amounted to trespass. The claim could also properly be advanced under the Torts (Interference with Goods) Act 1977, which applied to the pipe as a chattel.
4. Street works. The defendant accepted that it was an undertaker carrying out street works. Section 82(1)(b) of the New Road and Street Works Act 1991 therefore provided an independent basis of liability for reasonably incurred expense in making good damage to apparatus. The extent of recovery under that provision was left for determination on quantum.
5. Liability was established on the pleaded negligence, trespass and statutory bases. The claim proceeded to assessment of the loss.

This was a first-instance preliminary liability determination. The claim was issued on 11 May 2004, and a split trial was ordered by Master Tenant on 24 May 2005.