Biggart Baillie Solicitors

An Electricity Surge - Two Cases Concerning The Electricity Act

Tuesday, January 12, 2010

by Murray Shaw

The Scottish Courts have decided two cases (concerning very different issues) in relation to the Electricity Act and the proper interpretation of this legislation.  The situation is a bit like buses – no cases for ages then two come along at once!

The first decision was issued on 20 November 2009 and involves Patersons of Greenoakhill Limited v SP Transmission Limited.  The decision was a decision of Lord Glennie but it is to be appealed to the Inner House of the Court of Session. 

The Electricity Act 1989 in effect set up the privatised electricity industry.  Though private companies, those companies who are licensed under the Act to supply or transmit electricity are the beneficiaries of significant rights and powers (arguably necessary in the public interest to permit the supply of electricity).

In Scotland many electricity lines are put in place on the basis of wayleaves.  These are not registered and in effect are contractual arrangements between the relevant electricity company (or often in reality their predecessor in title) and the land owner.  Typically they entitle the land owner to give notice requiring the electricity company to remove the line over that land owner’s land within the period specified in the wayleave.  The statutory provisions equally apply where there has been a transfer of title so the successor land owner (who will not be bound by the wayleave) can give notice or where no wayleave exists at all (when a land owner can give notice requiring the electricity company to remove the relevant line).  In all these circumstances the electricity company is entitled to apply for a necessary wayleave in accordance with the provisions of Schedule 4 of the Electricity Act 1989. 

In this case Patersons of Greenoakhill gave notice to SP Transmission Limited requiring SP Transmission Limited to remove a stretch of line over land owned by Patersons of Greenoakhill.  Scottish Power applied to Scottish Ministers for a necessary wayleave.  If such an application is made timeously then the obligation to remove the line is suspended until the necessary wayleave application has been determined.  In this case however the parties went into a period of negotiation and the application for the necessary wayleave was sisted (stayed) for a considerable period of time.  Eventually the line in question was removed by Scottish Power as it was a line that was no longer required for their operations.  In fact the removal of the line had been programmed for some considerable time, the issue being the timing of that removal. 

If a necessary wayleave is granted then the land owner may have an entitlement to compensation under the Act.  In  this case no necessary wayleave had been granted but Patersons of Greenoakhill made a substantial claim for compensation nonetheless.  The case was really concerned about whether or not there was any right to compensation and if so, on what basis.  This argument was advanced by Patersons on three different bases, namely:-

1. That keeping the lines in place after the application for the necessary wayleave in itself constituted a necessary wayleave.  Lord Glennie rejected this argument on the basis that this approach was clearly at odds with the statutory position.  No necessary wayleave had in fact been granted.
2. That there was a right to compensation at common law as a result of additional expense caused to the Pursuers as a result of the “compulsory occupation” by Scottish Power in terms of the provisions of Schedule 4 to the Act.  In effect the fact that Scottish Power had applied for a necessary wayleave entitled them to maintain the line in place pending determination of the application – this was equated to “compulsory occupation”.  This was also rejected by Lord Glennie.  Lord Glennie indicated it was difficult to identify from the pleadings any proper legal basis for the argument and that he did not consider any relevant arguments had been advanced to him.
3. The third and last line of argument which the Pursuers accepted was “a poor third alternative” was that there had been some form of implied continuation of the previous wayleave notwithstanding the fact that Patersons had given notice to bring that wayleave to an end.  It was that notice in fact which resulted in Scottish Power making the application to Scottish Ministers for a necessary wayleave.  Lord Glennie did not consider that the case put forward by the Pursuers on this basis was relevant particularly having regard to the sums claimed by way of compensation.  However given the nature of the arguments Lord Glennie was prepared to allow the Pursuers, Patersons of Greenoakhill, an opportunity to amend their pleadings in this regard should they wish to do so.

In fact when the case called before him to decide upon further procedure Patersons made clear it was their intention to appeal principally in relation to Lord Glennie’s decision on the interpretation of the Act about whether or not a necessary wayleave had been constituted in all the circumstances of the matter ((a) above).  Lord Glennie accordingly dismissed the case thereby clearing the way for that appeal to take place. 

While this case may be thought to be essentially extremely technical and of limited relevance, the consequences are potentially significant.  There are literally thousands of miles of electricity lines within the UK which operate within the statutory framework considered in this case.  While applications for necessary wayleaves are relatively rare the outcome of this case (particularly in relation to what compensation may or may not be payable – an issue Lord Glennie did not get to the stage of addressing) may be significant.

The second case was a decision of the Inner House in Scotland (the equivalent of the Court of Appeal).  This case was decided on 8 December 2009 and involved Morrison Sports Limited & Others v Scottish Power.

In essence the issue was whether or not there was civil right of action to recover damages in respect of alleged breaches of the Electricity Supply Regulations 1988.  While these regulations pre-dated the 1989 Act that Act specifically made provisions for them to continue in effect. 

In this case it was alleged that a fire had been caused due to defective arrangements in respect of an electricity meter in a building.  The Defenders, Scottish Power, denied liability on the facts but equally argued that the case brought by the Pursuers was irrelevant insofar as based upon the 1988 Regulations as these did not result in any civil liability for damages. 

This was an argument rejected by the judge at first instance and equally rejected by the Inner House of the Court of Appeal.  The Inner House carried out a detailed analysis of the regulations in the context of the Electricity Act and other legislation relating to supply of electricity.  Section 29(3) of the 1989 Act provides that if there is a contravention of the relevant regulations that might result in a criminal conviction.  The section went on specifically however that “nothing in this sub-section shall affect any liability of any such person (electricity supplier) to pay compensation in respect of any damage or injury which may be have been caused by the contravention”.  While the 1988 Regulations were made prior to the 1989 Act, the 1989 Act continued their effect so the court considered that the proper interpretation of this section was critical to the outcome of the case.  Accordingly a key issue was what was meant by “compensation”. 

The court gave careful consideration to this having regard to the use of that word in other similar provisions.  They also considered carefully the purpose of the legislation and previous decisions in which predecessor versions of the Electricity Supply Regulations were given consideration.

Having considered all of the foregoing the court held that civil liability could arise in terms of the regulations. 

This decision does not conclude matters because Scottish Power are denying the assertion that their employees were in any way to blame with the consequence that there will need to be a proof with evidence to determine that issue. 

The decision of the court is probably not altogether surprising in the circumstances having regard to previous decisions and indeed the purpose of the regulations.  The general issue of whether or not a breach of a statutory obligation gives rise to a civil liability is a complex one.  A number of cases make clear that the position will very much turn upon the wording in the particular set of regulations – some regulations for example exclude civil liability.

The two cases are very different and deal with very different aspects of the electricity industry.  The Patersons case is really concerned with the transmission or distribution of electricity and the systems necessary for that, while the Morrisons case is concerned with issues to do with the day to day supply of electricity, in this case in a commercial context.  Both cases are significant albeit in very different ways.