Barratt Homes Limited v Dwr Cymru Cyfyngedig

This appeal concerned the construction of section 106 of the Water Industry Act 1991, which gives the owner or occupier of premises a statutory entitlement to have his private drain or sewer communicate with a public sewer. The principal question was whether the sewerage undertaker can determine or veto the point at which the private drain or sewer connects to the public sewer.

The Supreme Court held that, on its natural meaning, section 106 confers a right on the developer to connect at the point he chooses subject only to the specific grounds in section 106(4) — namely defects in the mode of construction or condition of the private drain or sewer — and to the undertaker's market for making the communication himself under section 107. The Court rejected arguments that the phrase "mode of construction" should be read as including the chosen point of connection or that the undertaker has a general right to select the point of connection.

The Court also held that the statutory time limits for giving notice under sections 106(4) and 107(1) (21 and 14 days respectively) are to be strictly applied as they operate to remove a developer's otherwise vested right to connect.

Background and parties. Barratt Homes (developer) proposed a large residential development near Llanfoist. Welsh Water (the sewerage undertaker) objected to Barratt's proposed point of connection on the ground that that point would overload an existing narrow section of the public sewer and increase the risk of sewage escape. Barratt served notice under section 106 of the Water Industry Act 1991 seeking to connect their private sewer to the public sewer at a point close to the development.

Procedural history. At first instance Wyn Williams J found for Welsh Water ([2008] EWHC 1936 (QB)). The Court of Appeal reversed ([2008] EWCA Civ 1552) in favour of Barratt. Welsh Water appealed to the Supreme Court.

Nature of the claim and relief sought. The appeal was brought by the sewerage undertaker seeking a declaration that it may refuse or dictate the point of connection of a private drain or sewer to a public sewer when the proposed point would be unsuitable for the public sewerage system, and clarification of the effect of the statutory time limits for refusal under section 106(4) and for intention to make the connection under section 107(1).

Issues framed by the court.

• Whether the phrase "mode of construction or condition of the drain or sewer" in section 106(4) can be interpreted to include the point of connection to the public sewer.
• Whether an undertaker has an independent right to identify or require an alternative point of connection.
• Whether the 21-day period in section 106(4) (and 14-day period in section 107(1)) is mandatory so as to bar a late notice of refusal.
• Secondary issues about the interaction of the statutory scheme with planning controls and the role of OFWAT in dispute resolution.

Court’s reasoning and subsidiary findings. The majority (Lord Phillips, with Lords Saville, Walker and Clarke) concluded that: (i) the natural meaning of section 106 confines grounds of refusal to the condition or mode of construction of the private drain or sewer to be connected and does not extend to the developer's choice of point of connection; (ii) historical legislation and comparative Scottish provisions do not justify reading the words wider than their natural meaning; (iii) the practical problem in the case was not the point of connection but the wider consequence that section 106 permits a developer, on 21 days' notice, to connect to a public sewer that may lack capacity, leaving the undertaker to bear upgrade costs under the statutory scheme; (iv) the 21-day and 14-day time limits are to be strictly applied because notices under those provisions remove an otherwise vested right to connect and criminal offences attach to non‑compliance; (v) planning processes and consultation with OFWAT may be the practical means to manage capacity and timing issues, and further thought should be given to interaction between planning and water regulation.

Dissenting view. Lady Hale would have read the historical legislative background as supporting a wider meaning of "mode of construction" that could include the manner and point of connection, leaving the reasonableness of any refusal for OFWAT to determine. She would have allowed the appeal on that basis.

Appeal dismissed. The Supreme Court (majority) held that section 106 of the Water Industry Act 1991, read naturally, gives the developer the right to connect his private drain or sewer to a public sewer at the point he proposes, subject only to the grounds in section 106(4) relating to the mode of construction or condition of the private drain or sewer and to the undertaker's option under section 107. The Court rejected an implied right for the undertaker to select or veto the point of connection. The Court also held that the statutory time limits in sections 106(4) and 107(1) are mandatory and must be strictly applied.

First instance: Wyn Williams J in the High Court (Queen's Bench Division) found for the undertaker [2008] EWHC 1936 (QB) (1 August 2008). Court of Appeal: reversed and found for Barratt Homes [2008] EWCA Civ 1552 (28 November 2008). Final appeal: Supreme Court [2009] UKSC 13 (9 December 2009) — appeal dismissed.