Thames Water Utilities Ltd. v Transport for London

MR JUSTICE HICKINBOTTOM:

On 13 February 2012, District Judge Barron sitting in the Westminster Magistrates' Court convicted the Appellant Thames Water Utilities Limited ("Thames Water") of the following offence:

The regulatory background is, briefly, as follows. For the purposes of street and road works, a statutory undertaker is a person entitled by virtue of a statutory right to carry out such works. Part 3 of the New Roads and Street Works Act 1991 provides for a scheme requiring a statutory undertaker which proposes to execute street works to give notice in a specified form to the local highway authority responsible for the relevant street. The obligation to give advanced notice is laid upon the statutory undertaker (section 54(1)); it is uncontroversial that that obligation cannot be delegated to (e.g.) a contractor which might perform the works on the undertaker's behalf; and it is that undertaker which is guilty of an offence if works are executed (whomsoever by) without the appropriate notice being given (section 54(5)).

Section 59 imposes a duty on a highway authority to co-ordinate works that take place on the highway in its area. Section 60 imposes a parallel duty on statutory undertakers to co-operate in that process. However, the provisions of the 1991 Act have not been entirely successful in ensuring that works to streets have been optimally managed and co-ordinated.

The Traffic Management Act 2004, and the Traffic Management Permit Scheme (England) Regulations 2007 ("the 2007 Regulations") made under that Act, enable a local highway authority to adopt a scheme whereby, prior to such works being carried out, a permit has to be obtained from the authority. Such a permit must specify the particulars of the works to be performed, including which and when streets will be affected, and it may have conditions attached to it. It was hoped that this new scheme, which requires the authority to play a more active role, would enable authorities better to manage essential works that affect streets and traffic flow. Once an authority adopts a permit scheme, then the provisions of the 1991 Act concerning notice of street works (i.e. sections 53-57 and 66) are disapplied (regulation 36 of the 2007 Regulations), being replaced by the permit provisions of the 2007 Regulations and the particular scheme adopted by the relevant authority.

London was the first area to formulate a permit scheme under these provisions, namely the London Permit Scheme for Road Works and Street Works ("the London Scheme"), which was approved and made available for adoption by the various highway authorities in London on 15 October 2009. As I understand it, it has now been adopted by all or virtually all of those authorities which, for these purposes, are known as "permit authorities".

Regulation 9 of the 2007 Regulations requires any scheme to incorporate a number of features, including the specification of persons by whom and circumstances in which a permit is required (regulation 9(2)). The London Scheme imposes the obligation to obtain a permit on the statutory undertaker thus. Paragraph 5.1 provides:

Part 5 of the 2007 Regulations deals with "Sanctions" for undertaking any registrable activity on a road or street without a permit. Regulation 18(1) provides:

By regulation 18(3), if a statutory undertaker fails to comply with such a notice, then the authority may take the steps specified in the notice and recover the costs from the undertaker accordingly.

Regulation 19, with which this appeal is particularly concerned, provides for criminal sanctions, as follows:

Where the authority has reason to believe that an offence under regulation 19 or 20 has been committed, then it may prosecute or alternatively issue a fixed penalty notice under the provisions of regulations 21-28. A fixed penalty notice is a notice offering a person the opportunity of discharging any liability to conviction by payment of a financial penalty. Such a notice cannot be given more than 91 days after the commission of the offence, and is effective for 36 days. The penalty in respect of an offence under regulation 19 is £500 if paid within 36 days of the notice (regulation 24), reduced to £300 if paid within 29 days (regulation 25). If that penalty is paid in time then criminal proceedings cannot be brought (regulation 26). Regulation 27 allows an authority to withdraw a fixed penalty notice, pay back a penalty, and pursue criminal proceedings, if it considers that a fixed penalty notice ought not to have been given.

The facts in relation to the charge made against Thames Water are uncontroversial. They are set out in paragraph 7 of the case stated.

Thames Water is a statutory undertaker pursuant to section 6 of the Water Industry Act 1991. The Respondent Transport for London ("TfL") is a permit authority for the purposes of the 2007 Regulations, and the relevant permit authority for London.

In February 2011, as a result of problems with a stop valve connection in Holloway Road in North London, TfL required Thames Water as the relevant statutory undertaker to perform emergency works. It performed those works on an interim basis, obtaining a permit from TfL to do so on 25 February 2011. It then contracted out the permanent reinstatement works to a company called Cappagh Browne JV. By the terms of the contract between them, Cappagh Browne was responsible for obtaining the necessary permit. It applied three times for a permit to carry out the works, and to perform them on three different specified occasions, those applications being made on 22 March and 5 and 7 April 2011. Each application was refused on the ground that the works would conflict with other activities on that site or, in the case of the last, that no proper request had been made for an early start.

On 13 April 2011, a TfL inspector attended the site in Holloway Road, and found that the reinstatement works had been done. It is not in dispute that they had been performed by Cappagh Browne that day, without any permit having been issued.

A week later, on 20 April, TfL issued a fixed penalty notice to Thames Water for the offence of undertaking the works without a required permit. On 3 June 2011, Thames Water attempted to pay that penalty; but that was rejected because the attempted payment had been made outside the 36-day period allowed. Thames Water was informed that it would be prosecuted for the offence.

On 8 September 2011, an information was laid at Westminster Magistrates' Court by TfL for a summons to be issued for a charge in the terms I have already set out. The summons was returnable on 26 October 2011, when a not guilty plea was entered. The proceedings were then adjourned to 13 February 2012. That day, before District Judge Barron, Thames Water submitted that it was not the correct defendant to the proceedings, as Cappagh Browne had been contracted to carry out the works and was responsible for applying for the permit. Cappagh Browne, it was said, should have been prosecuted instead of them.

The District Judge concluded that Thames Water could be prosecuted for the offence under regulation 19, even if it had contractually required Cappagh Browne to apply for the permit and comply with all relevant street works legislation. As a result Thames Water changed its plea to guilty, and was sentenced to a fine of £850.

Thames Water now appeals to this court. The question for the opinion of the court has been framed by the District Judge, as follows:

Mr Bradnock for the Appellant submits that that conclusion was wrong in law: whereas the 1991 Act imposes non-delegable obligations on a statutory undertaker, the fundamentally different wording of the 2007 Regulations places duties on the undertaker that are delegable to a contractor. Where, as in this case, there is a delegation of the obligation to obtain a permit, then in any prosecution for performing works without a permit, the defendant is properly the contractor and not the statutory undertaker. Similar wording to the 1991 Act could and, he submitted, would have been used if the intention had been to retain the non-delegability of the statutory duties.

As with the construction of any statutory provisions, the starting point must be the relevant wording of regulation 19(1) itself, namely:

In my judgment, the meaning of those words, on their face, is clear: it is an offence for a statutory undertaker to undertake works without a permit, and it is also an offence for a person contracted to execute works on an undertaker's behalf to do so. Only a statutory undertaker has the statutory right and obligation to execute works to streets and roads as part of its undertaking, although it may use a contractor to perform the actual works. However, when such works are begun and progressed, as a matter of ordinary English usage, the statutory undertaker "undertakes" those works, whether or not the works are in fact performed in the street by the undertaker itself or a contractor on its behalf: and, whether or not any contractor was employed and/or is liable to prosecution under regulation 19, where a statutory undertaker so undertakes works then it is liable for prosecution if there is no permit for those works. Or, to reformulate that proposition, a statutory undertaker cannot avoid a criminal sanction in the event that works for which it is statutorily responsible are done without a permit, by purporting to delegate the responsibility before obtaining a permit to a contractor.

Given that the statutory words are straightforward, clear and unambiguous, the legal meaning of regulation 19 must follow the plain meaning of those words. However, there is in my view, also support for that conclusion with regard to the wording from the following.

First, regulation 18 of the 2007 Regulations enables a permit authority by notice to require any person who, without a permit, undertakes works that require a permit, to take remedial action. However, in the event of non-compliance, it only enables a sanction to be imposed upon a statutory undertaker. It seems to me implicit in this that, whoever actually performs the works, for the purposes of regulation 18 a statutory undertaker must "undertake" them and be subject to a sanctionable requirement to remedy any breach of the permit scheme. Otherwise, where a contractor in fact performs the works, an effective sanction could not be imposed upon anyone for a failure to comply with the notice. Given that "undertake" in this context must sensibly mean the same thing in regulations 18 and 19, that supports the conclusion on the wording of regulation 19 that I have reached.

Second, I draw comfort from the London Scheme itself. It seems to me to be implicit from the section on sanctions (section 15) that a statutory undertaker will be criminally liable where any works for which it has a statutory responsibility are performed without a permit (see, e.g., paragraph 15.5.2).

But, looking at the scheme more broadly, there is no suggestion in any part of it that a statutory undertaking can in any respect avoid its statutory responsibility for obtaining a permit for any street or road works for which it is made responsible by the statutory scheme. Far from it. As I have already indicated, the London Scheme imposes all obligations in respect of permits upon the relevant statutory undertaker. That is where the obligation to obtain a permit squarely lies. The undertaker must make the application for the permit, and, if a contractor in fact makes an application (as in this case), it can only do so on behalf of and as agent for the undertaker; that is something very different from delegation. In those circumstances, while such an undertaker may agree with a contractor that the latter will apply for permit on its behalf, as matter of public law it cannot divest itself of its statutory responsibility. In my view, it is entirely consistent with the purposes of the regulatory scheme (which is designed to ensure that road works in London are co-ordinated and managed by the authorities responsible for highways), and with good administration, that the statutory undertaker retains responsibility for ensuring that road works for which it is responsible by statute are not performed without a permit; and that the statutory undertaker is open to sanctions, including any appropriate fixed penalty or criminal sanction, if they are.

Third, the Department of Transport has issued guidance in relation to permit schemes in the form of a document, "Traffic Management Act 2004 Code of Practice for Permits" (March 2008). Under the heading "Guidance for Undertakers, Basic Principles", paragraph 18.4.1 states:

Fourth, in my view, reference to the 1991 Act also supports the conclusion I have reached. Mr Bradnock relied upon the difference in wording between the 1991 Act (under which, he accepts, the obligations imposed upon a statutory undertaker are not capable of delegation), and the 2004 Act. However, that difference in my view need not be explained, as he sought to explain it, as an intention to make obligations delegable. An alternative is that, by adding references to the contractor being liable to a criminal charge for undertaking street works without a permit, the intention was to increase control by adding the possibility of also pursuing a contractor - rather than decreasing control by enabling a statutory undertaking to circumvent its statutory obligations by passing them onto a contractor, and requiring the permit authority to prove precisely who was responsible for obtaining the permit as between the undertaker and the contractor or contractors. As Mr Bradnock submitted, the authority would have to prove that to the criminal standard. In a case where the contractual responsibility for obtaining the permit is unclear, on the basis of that submission it is possible that no one would be criminally liable for a breach of regulation 19. That, in my judgment, cannot have been the intention of the provision.

It is clear that 2004 Act and 2007 Regulations were intended to give highways authorities more and better control over the management and co-ordination of street and road works, and the disruption to traffic that that may cause, not less and worse. It would in my view be remarkable if, under the 2004 Act scheme, control was effectively relaxed by relieving statutory undertakers of the criminal sanction to which they are subject in non-delegable form in the 1991 notice scheme.

Finally, I would add that a statutory undertaker can of course usually avoid criminal proceedings by responding positively to a fixed penalty notice. Such a notice will, as in this case, usually be issued by the authority and, if the penalty is paid in time, that will avoid the possibility of criminal proceedings altogether.

However, in my judgment, on a proper reading of the provisions, for the reasons I have given, it is clear that a statutory undertaker cannot divest itself of its statutory obligations (or its liability to a fixed penalty or criminal sanctions, if those obligations are not met), by a mere contract purporting to pass them onto a third party. That is not the nature of such statutory obligation generally and, certainly, it is not the nature of the statutory obligations on a statutory undertaker in the context of street work permits under the London Scheme.

For those reasons, I consider the answer to the question posed is "Yes": the District Judge was right to conclude that a statutory undertaker is unable to avoid liability under Regulation 19 of the 2007 Regulations by delegating its responsibilities and obligations under those Regulations and the London Scheme to a contractor.

I would consequently dismiss this appeal.

LORD JUSTICE LAWS:

I agree that the answer to the question posed by the Magistrates' Court is in the affirmative, for all the reasons given by my Lord. I should particular emphasise that, as it seems to me, the words of regulation 19(1) are entirely clear.