Cadent Gas Limited v CityFibre Limited

Claims under New Roads and Street Works Act 1991, section 82(1), are expressed as conferring a right to compensation where an undertaker causes damage or loss through street works. They therefore fall within the exclusion from mandatory arbitration in section 96(3), even where the claim concerns expenses incurred in repairing damaged apparatus. The exclusion can apply to a claim which would otherwise fall within the general arbitration provision. Administrative expenses under section 96(1) form part of the substantive section 82 claim and should be determined in the same forum. The statutory language cannot be displaced by policy considerations favouring arbitration or by the perceived efficiency of a particular dispute-resolution process.

CityFibre claimed approximately £7,093 from Cadent under section 82(1)(b) of the New Roads and Street Works Act 1991 for expenses incurred after Cadent allegedly damaged CityFibre’s network apparatus during street works. CityFibre also claimed administrative expenses under section 96(1).

A sole arbitrator appointed under section 99 decided that he had jurisdiction. Cadent challenged that decision under section 67 of the Arbitration Act 1996. The central issue was whether the claim fell within the section 96(3) carve-out for a provision expressed as conferring a right to compensation, or instead within the mandatory arbitration regime for recovery of costs and expenses.

1. Challenge allowed. The court set aside the relevant parts of the arbitrator’s partial award and declared them to be of no effect because the tribunal had no jurisdiction to determine the dispute.
2. A section 67 challenge is a de novo rehearing of jurisdiction. The arbitral award has no automatic legal or evidential weight, although the court may be persuaded by reasoning it finds convincing.
3. Statutory provisions must be interpreted by reference to their language, read in the context of the statute as a whole and its purpose. External aids are secondary and cannot displace clear statutory language.
4. Section 82(1) imposes liability to compensate two classes of person. Paragraph (a) concerns authorities and damage or loss suffered in that capacity. Paragraph (b) concerns other persons having apparatus in the street and is narrower, extending to expenses reasonably incurred in making good damage.
5. Section 96(1) does not create an independent claim for administrative expenses. Such expenses form part of the substantive claim under the relevant enabling provision, here section 82(1). There is consequently one composite claim and no bifurcation between remedial expenses and administrative expenses.
6. The words “shall compensate” expressly condition both paragraphs of section 82(1). Both provisions are therefore expressed as conferring a right to compensation within the section 96(3) carve-out. The claims fall outside mandatory arbitration under section 96(3), notwithstanding that they also concern recovery of costs or expenses.
7. Policy considerations, including the potential speed and cost advantages of arbitration, could not overcome the statutory wording. The earlier authorities concerning the 1991 Act did not directly decide the jurisdictional issue and provided no assistance sufficient to alter that conclusion.
8. The court granted permission to appeal because the issue was novel, of general public importance, and had a real prospect of success on appeal. The provisional costs order was that CityFibre should pay Cadent’s arbitration and court costs, subject to consequential submissions.

Cadent challenged the arbitrator’s partial award under section 67 of the Arbitration Act 1996. The High Court allowed the challenge, set aside the relevant parts of the award and granted permission to appeal to the Court of Appeal.