Southern Gas Networks Plc v Thames Water Utilities Ltd

A statutory remedy for expenses reasonably incurred in repairing damage to street apparatus does not cover compensation paid to customers for an interrupted gas supply. Such payments are consequential losses triggered by interruption, rather than expenses of making good physical damage. The remedy in section 82(1)(b) of the New Roads and Street Works Act 1991 is strict but limited. Section 82(6) preserves liabilities to which an undertaker would otherwise be subject. The statutory remedy therefore coexists with a negligence claim for wider loss, subject to proof of negligence and ordinary contributory-negligence principles. A common-law remedy is displaced only where proper construction shows that Parliament intended that result.

Thames Water negligently allowed water to escape from its water main and enter Southern Gas’s nearby gas network. Southern Gas paid statutory Failure to Supply Gas compensation to affected customers and claimed reimbursement under section 82(1)(b) of the New Roads and Street Works Act 1991, alternatively in negligence. The Deputy High Court Judge dismissed both claims, holding that the payments were not expenses of making good damage and that the statutory scheme excluded common-law liability. The appeal concerned both conclusions.

The appeal was allowed in part. Lord Justice Hickinbottom gave the leading judgment, with Lord Justices Underhill and Jackson agreeing.

1. Section 82(1)(b) of the New Roads and Street Works Act 1991 permits a person with apparatus in the street to recover expenses reasonably incurred in making good physical damage to that apparatus. It does not extend to consequential financial losses. Failure to Supply Gas payments arise because the gas supply was interrupted and continue until restoration. They are compensation for loss of supply, not expenses of repair. Ground 1 was therefore dismissed.
2. Whether a statutory remedy excludes a common-law remedy depends on the true construction of the statute and Parliament’s intention. The threshold for inferring exclusion is high. A difference between remedies is insufficient unless it is substantial enough to make their coexistence incompatible or positively inconsistent.
3. Section 82(6), construed according to its ordinary wording, preserves any liability to which an undertaker would otherwise be subject. It applies generally and is not confined to liabilities owed to third parties. It therefore preserves common-law remedies available to a person whose street apparatus is damaged.
4. In any event, the limited strict-liability remedy under section 82(1)(b) is capable of coexisting with negligence liability. The statutory route permits recovery of repair expenses without proof of negligence. A claimant seeking wider financial loss must establish negligence, subject to the ordinary rules of contributory negligence.
5. The wider provisions of the Water Industry Act 1991 and the New Roads and Street Works Act 1991 did not create a single code excluding common-law rights. The unresolved issues concerning sewerage duties, including the policy and operational distinction, were unnecessary to decide.

The order dismissing the negligence claim was quashed. Judgment was entered for Southern Gas in the agreed sum.

1. Court of Appeal (Civil Division) Appeal from the High Court decision was allowed on the negligence ground, while the statutory claim failed. The order dismissing the claim was quashed and judgment was entered for the Appellant.
2. High Court, Queen’s Bench Division, Technology and Construction Court The Deputy High Court Judge dismissed the statutory and negligence claims: [2016] EWHC 1669 (TCC) .