Cadent Gas Limited v CityFibre Limited [2025] EWHC 910 (Comm)

[2025] EWHC 910 (Comm)Case No LM-2024-000201
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (KBD)
Venue Royal Courts of Justice,, Rolls Building., Fetter Lane,Date Wednesday, 16 April 2025
London, EC4A 1NL
Before
HIS HONOUR JUDGE HODGE KCSitting as a Judge of the High Court
Between
Cadent Gas LimitedClaimantCityFibre LimitedDefendantCadent Gas Limited Claimant/Respondent in Arbitration- and -CityFibre Limited Defendant/Claimant in Arbitration
Mr Richard Liddell KC and Mr Alessandro Forzani (instructed by DWF Law LLP, Manchester) for Claimant (the Respondent in the Arbitration)Mr Simon Croall KC (instructed by Bristows LLP, London) for Defendant (the Claimant in the Arbitration)Hearing Hearing date: Tuesday, 28 January 2025 (sitting remotely by Teams)Date judgment circulated: Monday 14 April 2025Date judgment handed down: Wednesday 16 April 2025
Approved JudgmentThis judgment was handed down remotely at 10.00am on Wednesday 16 April 2025 by circulation to the parties or their representatives, by e-mail, and by release to the National Archives..............................HIS HONOUR JUDGE HODGE KCArbitration– Jurisdiction of arbitrator – Challenge to jurisdiction – Claim for recovery of costs and expenses in respect of street works under s. 82 (1) (b) of the 1991 Act – Whether claim to be determined by single arbitrator or by way of litigation in the county court – Provisions for mandatory arbitration in s. 96 (3) – Whether present claim within the ‘carve-out’ for provisions ‘expressed as … conferring a right to compensation’ –Arbitration Act 1996, s. 67; New Roads and Street Works Act 1991, ss 82 (1), 96 (1), (3), 99The following cases are referred to in the judgment:British Telecommunications Plc v Bell Cable Media (Leeds) Ltd[2001] BLR 343Kostal UK Ltd v Dunkley[2021] UKSC 47, [2022] ICR 434, [2022] 2 All ER 607Premium Nafta Products Ltd v Fili Shipping Company Ltd[2007] UKHL 40, [2007] Bus LR 1719, [2007] 4 All ER 951Regina (O) v Secretary of State for Home Department andRegina (Project for Registration of Children as British Citizens) v Secretary of State for the Home Department[2022] UKSC 3, [2023] AC 255R (Quintavalle) v Secretary of State for Health[2003] UKHL 13, [2003] 2 AC 687Republic of Mozambique v Privinvest Shipbuilding SAL Holding[2023] UKSC 32, [2023] Bus LR 1359, [2024] 1 All ER 763Road Management Services (A13) Plc v London Power Networks Plc[2003] BLR 303Southern Gas Networks Plc v Thames Water Utilities Limited[2016] EWHC 1669 (TCC), [2018] EWCA Civ 33, [2018] 1 WLR 5977Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners[2020] UKSC 47, [2022] AC 1
[1]In the course of carrying out street works to its gas distribution apparatus, a statutory undertaker causes damage to the network infrastructure of an internet provider. Is the ensuing claim for statutory compensation to be determined by arbitration or by way of litigation allocated to the small claims track in the county court? This issue turns on a short, but difficult, question of statutory interpretation.[2]The general rule is that claims for the recovery of costs and expenses in respect of street works fall to be determined by a single arbitrator appointed (in default of agreement between the parties) by the President of the Institution of Civil Engineers. However, there is a ‘carve-out’ in respect of any statutory provision ‘expressed as … conferring a right to compensation’. Not without some hesitation, I have concluded that claims of the present kind fall within the scope of this ‘carve-out’. I arrive at this conclusion with no degree of enthusiasm because of the potential for delay in the determination of such claims, and the increased workload that will fall on already hard-pressed county courts, as a result of my decision. However, I feel constrained to this conclusion by the wording of the statute.[3]The monetary value of the incident which led to this claim is small (a little over £7,000, exclusive of legal costs and interest). However, both parties recognise that the jurisdictional question raised by these proceedings is of general public importance because of the considerable number of these low-value claims. This is evident from the instruction of leading counsel on both sides of this jurisdictional challenge. This court recognises the importance of an effective process of determining disputes arising out of these relatively low-value street works claims. They need to be resolved in a cost effective and timely manner, with appropriate incentives for early settlement. I will therefore grant leave to appeal from my decision under s. 67 (4) of the Arbitration Act 1996 (the 1996 Act). I do so because this dispute raises a novel point of statutory interpretation of general public importance which merits consideration by the Court of Appeal. The parties have both the resources, and the enthusiasm, effectively to litigate this issue before that forum. These factors combine to constitute a compelling reason for giving permission for the Court of Appeal to hear an appeal from my decision. I also give permission to appeal since I am satisfied that an appeal from my decision stands a real prospect of success.[4]For the benefit of the Court of Appeal, this judgment seeks to incorporate all the material that court will need to consider on the hearing of any appeal from my decision. It summarises: the background to this claim; the material evidence; the statutory scheme of the governing legislation; the arbitrator’s partial award; the law that applies both to any challenge to an arbitrator’s jurisdiction and to the interpretation of statutory provisions; counsel’s competing submissions; and my analysis and conclusions. Any reader prepared to forego the preliminary ‘warm-up’ exercises, and to pass over a small shoal of red herrings, should feel free to fast-forward to paragraph 144 of this judgment, where my essential reasoning begins.

Background

[5]This is my considered judgment on the substantive hearing of an application, issued by Cadent Gas Limited (Cadent) on 29 July 2024 under s. 67 of the 1996 Act, challenging the award of an arbitral tribunal as to its substantive jurisdiction. The claimant in the underlying arbitration is CityFibre Limited (CityFibre). It seeks to recover, under s. 82 (1) (b) (within Part III) of the New Roads and Street Works Act 1991 (the 1991 Act), its expenses in making good damage allegedly caused by Cadent, in December 2022, to CityFibre’s network cables and apparatus in Bracknell, together with administrative expenses, general staff costs and overheads pursuant to s. 96 (1) of the 1991 Act. On 23 April 2024 CityFibre applied to the President of the Institution of Civil Engineers for the appointment of an arbitrator. Mr Donny Mackinnon was appointed as sole arbitrator later that day. He issued a partial award on 2 July 2024 ruling that he had the necessary jurisdiction to determine the dispute, and declining to resign for want of jurisdiction.[6]Cadent is a gas distribution company and a statutory undertaker. It has a general licence to carry out development works on and under streets. Cadent is represented by Mr Richard Liddell KC, leading Mr Alessandro Forzani (of counsel). CityFibre is an internet network provider which owns infrastructure across the United Kingdom including, relevantly for this case, apparatus and equipment comprising network cables located in Bracknell. These are the subject of the present dispute. It, too, is a statutory undertaker. It is represented by Mr Simon Croall KC. Under the statutory regime governed by Part III of the 1991 Act, CityFibre is entitled to bring a claim against another undertaker if, during the course of street works carried out by that undertaker, CityFibre’s apparatus is damaged, and costs are incurred in repairing that damage.[7]CityFibre’s position is that the dispute between the parties is arbitrable by virtue of ss 96 (3) and 99 of the 1991 Act. By contrast, Cadent’s position is that the dispute is not arbitrable if the statutory scheme underlying Part III of the 1991 Act is interpreted correctly; and it has objected to the jurisdiction of the arbitrator. This dispute as to the arbitrator’s jurisdiction turns on the true interpretation of provisions in Part III of the 1991 Act.[8]By his partial award, the arbitrator determined that he did have the necessary jurisdiction to adjudicate upon this dispute. He ordered Cadent to pay CityFibre’s costs of answering the challenge to his jurisdiction, together with the arbitrator’s fees and expenses in the sum of £10,000 (plus £2,000 VAT). These legal fees greatly exceed the sums presently in dispute between the parties.[9]By this arbitration claim, Cadent challenges the arbitrator’s award, seeking a declaration that the arbitrator has no jurisdiction to determine the substantive dispute between the parties. Cadent also invites the court to order CityFibre to pay Cadent’s own costs, both before the arbitrator and of this claim, together with the arbitrator’s own fees and expenses. It is common ground that the partial award of the arbitral tribunal as to its substantive jurisdiction is amenable to challenge under s. 67 of the 1996 Act.[10]The sums that CityFibre seeks to recover in the underlying claim are relatively modest (amounting only to some £7,093, exclusive of interest and legal costs). However, a substantial number of similar claims, both present and future, are likely to be affected by the issue raised in these proceedings: That is whether claims against utilities providers and statutory undertakers arising out of damage caused to network cables should be adjudicated upon by way of arbitration (as CityFibre contends and the arbitrator has determined) or by way of litigation in the county court (as Cadent submits). This dispute as to the appropriate forum for such claims has a particular resonance at a time when (according to data from April to June 2024, recently noted in the law pages of ‘The Times’) the average time taken for small claims and multi/fast track claims to proceed to trial now exceeds some 50 and 79 weeks respectively, representing an increase of between 14 and 20 weeks since 2019. This has led the present cross-party Justice Committee to revive an inquiry, initiated by its predecessor, into the workings of the county court. In evidence to that Committee as recently as 8 April 2025, the Minister of State for Courts and Legal Services (Ms Sarah Sackman KC, MP) reported that the average time taken for dealing with a small claim in London and the South-East, which is the region with the greatest challenges, is 67 weeks, with over 125 weeks to dispose of multi-track cases. The jurisdictional question at issue in these proceedings is therefore significant.[11]There is no evidence before the court as to the average time taken for a substantive arbitral award to be issued on a reference under Part III of the 1991 Act. I note that the partial award as to jurisdiction in the present case was issued on 2 July 2024, only some 10 weeks after the arbitrator’s appointment (on 23 April 2024, which was the same day as the application for the appointment of an ICE arbitrator was made to its Dispute Resolution Committee). However, I also note that CityFibre’s solicitors’ formal letter of claim was issued over seven months earlier, on 12 September 2023; and that the notice of commencement of arbitration is dated 5 October 2023. CityFibre’s evidence is that generally claims take longer to resolve through the court system than by arbitration, and at greater cost. Statutory arbitration (typically involving surveyors, or similar technical people, as arbitrators) provides a regime that usually allows for the cost effective and speedy resolution of such claims. This evidence is not formally challenged by Cadent, although it points out that claims such as the present are typically straightforward.[12]The hearing of this arbitration claim proceeded remotely, via the Teams video platform. Prior to the hearing I had the opportunity of pre-reading the application bundle and counsel’s skeleton arguments. These had been produced sequentially, with Mr Liddell serving his skeleton first, and Mr Croall delivering his skeleton argument the following day. The hearing was recorded by a transcription company; and I have had the benefit of reading the written transcript whilst preparing this reserved judgment.

Evidence

[13]The background to these arbitration proceedings, and the partial award, is more particularly set out in the supporting witness statement, dated 29 July 2024, of Mr Mark Mulgrave, the solicitor at the Manchester office of DWF Law LLP who has the overall conduct of this matter on behalf of Cadent. Mr Mulgrave’s witness statement was served with the claim form. It provides a brief overview of the underlying dispute between the parties; identifies the relevant legislative context, and provisions, of Part III of the 1991 Act; outlines the procedural history of the dispute, and the key aspects of the arbitrator’s partial award; summarises Cadent’s grounds for challenge, as set out in greater detail in the claim form; and explains the remedy that Cadent seeks by its claim form.[14]Mr Mulgrave acknowledges that Cadent’s legal arguments (in support of its application) will be addressed in greater detail in its skeleton argument on this application. However, at paragraphs 32-36 of his first witness statement, Mr Mulgrave broadly summarises the essential submissions to be made in support of Cadent’s application, as follows:(1) The arbitral tribunal failed to interpret the 1991 Act correctly. A claim under s. 82 (1) is one for compensation and thus falls within the category of disputes in s. 96 (3) that are not arbitrable. The term ‘compensation’ is not used in two senses in the 1991 Act (as CityFibre had contended in its submissions to the arbitrator).(2) There is no bifurcation of claims. Cadent no longer pursues any argument that ss 82 (1) and 96 (1) provide separate remedies. A claim under s. 96 (1) is part of a substantive claim for compensation under s. 82 (1) (b). These claims should be determined together by litigation (and not by arbitration). However, even if there were bifurcation, the result would be the same. Properly applied, the effect of the decision in Republic of Mozambique v Privinvest Shipbuilding SAL Holding [2023] UKSC 32, [2023] Bus LR 1359, [2024] 1 All ER 763 is that substantive claims (under s. 82 (1)) and ancillary claims (pursuant to s. 96 (1)) should be determined together by litigation.(3) The arbitral tribunal misunderstood, and placed too much weight upon, observations in Yorkshire Electricity Distribution Plc v Telewest Ltd [2006] EWCA Civ 1418, [2006] All ER (D) 369. There are also other case law authorities that are said to support Cadent’s position.(4) The Department for Transport’s Code of Practice for the Co-Ordination of Street and Road Works (the Code), published in March 2023, is also consistent with, and supports, Cadent’s position.[15]CityFibre relies upon the first witness statement, dated 6 September 2024, of Ms Anna Mary Helen Cook, a solicitor and partner in the firm of Bristows LLP with the overall conduct of this matter on behalf of the defendant. This witness statement addresses a single point. This is that the determination of these issues is of general importance. Ms Cook recognises that the monetary value of the incident which led to these proceedings is small (£7,093, exclusive of legal costs and interest). However, Ms Cook agrees with Mr Mulgrave that the jurisdictional question at stake in these proceedings is significant. Claims under s. 82 (1) (b) of the 1991 Act (termed ‘strike claims’ by Ms Cook) are often of low value, but they are very numerous. According to Mr David Scorer, the Operations Manager responsible for costs recovery at CityFibre, the number of incidents has been rising year-on-year, as CityFibre’s network grows in the UK. CityFibre has collected information about all third party incidents affecting its network (including vandalism). This shows that in 2022, there were 278 incidents, in 2023 there were 754 incidents, and by early September 2024 there had been 449 incidents. The majority of these incidents were strike claims. Ms Cook asserts the importance of an effective process to determine disputes arising out of strike claims. This is not just to ensure that the resolution of strike claims is both cost effective and timely. It is also because such a regime provides an incentive for strike claims to settle.[16]According to Ms Cook, statutory arbitration (typically involving surveyors, or similar technical people, as arbitrators) provides a regime that usually allows for the cost effective and speedy resolution of strike claims. This is partly because the procedure can be tailored appropriately for claims which are typically of low value, and ordinarily do not give rise to complex issues. This is especially so where, as is frequent, a technical person is appointed as arbitrator, with the result that detailed technical evidence is not required or can be limited. Moreover, the costs incurred can be recovered. These features also tend to encourage the settlement of strike claims.[17]Ms Cook understands from Mr Scorer that, as at 6 September 2024, CityFibre had 86 disputed strike claims which had not been settled and remained outstanding. Of these outstanding claims, 61 were below £10,000 in value (i.e. below the small claims cap threshold). The total value of these outstanding strike claims was £890,336, which is a significant sum.[18]Ms Cook emphasises that the issues in this arbitration claim are of general importance to any utility operator or undertaker carrying out street works. CityFibre’s claims are against utility companies, local authorities and other telecommunications companies. Any company carrying out street works is at risk of causing damage to, or having its own apparatus damaged by, third party undertakers. Since 1 January 2022, CityFibre has been involved as a defendant or respondent in 30 strike incidents, although it has only disputed three of these claims. This disparity is due to the fact that the streets are congested with utilities, and fibre cables are often laid at a shallower depth than other services. CityFibre also manages its sub-contractors to ensure that, where they have caused damage to a third party’s apparatus, disputes are not prolonged. In contrast, some of CityFibre’s claims are very long-standing. Cadent is not the only party to resist the jurisdiction of an arbitral tribunal to determine claims arising under s. 82 (1) (b) of the 1991 Act. In general, if a dispute cannot be settled, most respondents (and their subcontractors and insurers) insist that court proceedings are required. If CityFibre’s experience represents the situation nationwide, there must be large numbers of these claims within the court system.[19]Mr Cook asserts that a respondent who seeks to delay the point at which it is held liable in respect of a strike claim has every incentive to seek to ensure that it is litigated through the court system rather than by way of arbitration. The procedure in the small claims and county courts is rarely proportionate to the sum in dispute, and generally claims litigated there take longer to be resolved, and at greater cost. This is because:(1) Many county courts are highly congested, meaning that every step in the process takes a long time; and it can be difficult to synchronise the standard deadlines, keep track of events, and run these cases cost-effectively;(2) Small claims processes are standardised and often directions are issued automatically, making it difficult to obtain suitable directions, such as permission for expert evidence, or to seek a paper-only hearing;(3) The procedure usually requires factual witness evidence and an oral hearing, although it is questionable whether the factual witnesses (i.e. engineers and excavation teams) can add anything to the contemporaneous documents and photographs, especially long after the event; and(4) There tends to be a technical content to these disputes, so that, where the judge does not have the requisite technical knowledge, expertise, or experience, expert evidence may well be needed: (i) to assist the court as to whether the expenses claimed were reasonably incurred in making good damage to the apparatus (including all issues of causation under ss 82 (1) and (4) of the 1991 Act); and (ii) to address the quantification of administrative expenses, appropriate staff costs and overheads. In other words, the evidence of two experts (an engineer and a forensic accountant) is often needed.[20]In addition, it is very difficult for the winning party to recover its costs in the small claims court.[21]Bearing in mind the low value of these individual strike claims, and the costs of witnesses and experts, it tends not to be proportionate or cost effective for CityFibre to pursue these disputes through the courts. This means that if Cadent is correct on the issue of the jurisdiction of the arbitral tribunal, CityFibre (and parties in a similar position) will be left without any reasonable way to seek the determination of this, or any similar, strike dispute.[22]CityFibre recognises that, of themselves, these factors do not determine the issue of statutory construction which this claim raises. However, they are said to be relevant to the context in which this dispute arises, and its potential significance.[23]Mr Mulgrave addresses Ms Cook’s witness statement in his second witness statement, dated 13 September 2024. Recognising that it is not his function to argue the case, he responds briefly to one specific point made by Ms Cook, leaving the remaining points for skeleton arguments and oral submissions in due course. Cadent acknowledges, and accepts, CityFibre’s position that, in large part, claims under s. 82 (1) (b) of the 1991 Act are of low value and high volume. However, Mr Mulgrave’s own experience of acting for Cadent is that these low-value strike claims are typically very straightforward. It is not unusual to see particulars of claim containing little more than five sentences, to explain the basis for the claim and its factual aspects.[24]I note that Mr Mulgrave does not take issue with any of the other factual assertions made in Ms Cook’s witness statement.

The statutory scheme of Part III of the 1991 Act

[25]Part III of the 1991 Act is entitled ‘Street Works in England and Wales’. It runs from s. 48 (‘Streets, street works and undertakers’) to s. 106 (‘Index of defined expressions’). Ss 79 to 82 appear under the heading ‘Duties and liabilities of undertakers with respect to apparatus’. S. 82 is headed ‘Liability for damage or loss caused’. S. 82 (1) provides that: An undertaker shall compensate — (a) the street authority or any other relevant authority in respect of any damage or loss suffered by the authority in their capacity as such, and (b) any other person having apparatus in the street in respect of any expense reasonably incurred in making good damage to that apparatus, as a result of the execution by the undertaker of street works … .[26]S. 96 concerns the ‘recovery of costs or expenses’. S. 96 (1) provides that: Any provision of this Part enabling an authority, body or person to recover the costs or expenses of taking any action shall be taken to include the relevant administrative expenses of that authority, body or person including an appropriate sum in respect of general staff costs and overheads. This sub-section permits the Secretary of State to prescribe the basis on which such amounts are to be calculated. This was given effect by way of the Street Works (Recovery of Costs) (England) Regulations 2002, SI 2002/2091 (the 2002 Regulations).[27]S. 96 (3) deals with dispute resolution. The first half of the sub-section provides: Where under any provision of this Part a person is entitled in certain circumstances to recover costs or expenses incurred by him in executing works or taking other steps, any dispute as to the existence of those circumstances or as to the amount recoverable shall be determined by arbitration. The second half of the sub-section contains an explanation and an exclusion: This [i.e. arbitration under the first half of the sub-section] applies whether the provision is expressed as conferring a right to recover, or as imposing a liability to reimburse or indemnify or to bear the cost, but does not apply in relation to a provision expressed as providing for the charging of a fee or conferring a right to compensation or in relation to section 78 (contributions to cost of making good long-term damage to the street).[28]S. 99 is entitled ‘Arbitration’. It requires that Any matter which under this Part is to be settled by arbitration shall be referred to a single arbitrator appointed by agreement between the parties concerned or, in default of agreement, by the President of the Institution of Civil Engineers.[29]The 1991 Act received the royal assent on 27 June 1991. However, ss 82 and 96 did not come into force until 1 January 1993. (S. 99 had previously come into force on 14 July 1992.)[30]Mr Mulgrave points out that Part III of the 1991 Act uses the term ‘compensate’ on two other occasions (outside ss 82(1) and 96 (3)): (1) S. 79 requires a statutory undertaker to keep a record of the location of each item of apparatus. If it fails to do so, that undertaker is “liable to compensate any person in respect of damage or loss incurred by him in consequence of the failure”: see s. 79 (4) (b).(2) S. 84 requires an undertaker to take certain steps where its own apparatus is, or may be, affected by certain major works, and for any dispute between that undertaker and the relevant authority (such as a highway authority) to be settled by arbitration (in default of agreement). If one of the parties fails to comply with any agreement or the decision of the arbitrator, then it is “liable to compensate the other in respect of any loss or damage resulting from the failure”: see s. 84 (4).[31]Mr Croall points out that it is now well-settled that:(1) S. 82 (1) (b) imposes strict, or absolute, liability on the undertaker to compensate any other person having apparatus in the street in respect of any expenses reasonably incurred in making good damage to that apparatus as a result of the execution of street works. However, that liability is qualified by s. 82 (4) such that it does not extend to damage or loss which is attributable to misconduct or negligence on the part of either (a) the person suffering the damage or loss, or any person for whom he is responsible, or (b) any third party for whom neither the undertaker nor the person suffering the damage or loss is responsible. In other words, s. 82 provides for qualified strict liability on the part of the undertaker.(2) Contrary to what was suggested by the Court of Appeal in the Yorkshire Electricity case (at paragraph 6), the s. 82 regime does not provide a complete and comprehensive code excluding other common law liabilities or remedies.[32]Mr Croall points to other provisions of the 1991 Act that may also be of relevance (largely because they are commented upon in authorities upon which Cadent places some reliance). They include the following:(1) S. 58, which places restrictions on works following substantial road works and includes (in s. 58 (6) (b)) a regime requiring an undertaker ‘to reimburse’ the street authority if the undertaker carries out works to a highway subject to such restrictions, save for limited exceptions.(2) S. 66 (4), which applies where an undertaker creates an obstruction in a street to a greater extent, or for a longer period, than is reasonably necessary, and provides a regime whereby the authority ‘may recover’ the reasonable costs of taking any necessary steps to mitigate the obstruction.(3) S. 72 (4), which applies where an undertaker has failed to comply with its duties to reinstate a street to appropriate standards, and provides a regime whereby the authority ‘may recover’ the reasonable costs of investigatory and reinstatement works.(4) Ss 76 and 77, which enable the authority to ‘recover’ the costs of temporary traffic regulation, or require the undertaker to ‘indemnify’ the authority for the reasonable costs of diverting traffic via an alternative route.(5) S. 85 which, in certain circumstances, governs how the costs of measures required by major works are to be shared between the authority and the undertaker, and confers a right ‘to recover’ any unpaid costs.(6) Ss 90 (2) and (3) which, in certain circumstances, enable the authority to ‘recover’ from an undertaker the reasonable costs of steps taken by the authority to remedy the undertaker’s failure to comply with its obligations to reinstate sewers, drains or tunnels.

The partial award

[33]At paragraph 24 of his partial award, the arbitrator identified the issue for decision as whether CityFibre’s claim under s. 82 of the 1991 Act was excluded from the general arbitration provision in that Act by the second limb of the exclusion in s. 96 (3). At paragraph 30, the core issue was said to be whether the use of the word ‘compensate’ in s. 82 (1) makes that provision one conferring ‘a right to compensation’. At paragraphs 37 and 42 of his partial award, the arbitrator concluded that the exclusion, in the second limb of s. 96 (3), did not apply to the dispute included in the notice of arbitration; that CityFibre’s claim under ss 82 and 96 of the 1991 Act was not excluded from the Act’s general arbitration provision; and that the first limb of s. 96 (3) of the 1991 Act applied to the dispute in question. Cadent’s liability for costs followed from the failure of its challenge on the arbitrator’s substantive jurisdiction.[34]The key section of the partial award, expressing the arbitrator’s reasoning, is to be found at paragraphs 31-36. Paragraph 35 includes a citation from Buxton LJ’s leading judgment in Yorkshire Electricity Distribution Plc v Telewest Ltd [2006] EWCA Civ 1418, [2006] All ER (D) 369. Since I reproduce this later in my judgment, I pass over it in the citation that follows. Subject to that omission, paragraphs 31-36 read as follows: 31. Taking the natural and ordinary meaning of the words used, s. 82 (1) makes an undertaker, who has damaged a person’s apparatus, liable to pay (compensate) the injured person money for ‘any expense reasonably incurred in making good [that] damage to that apparatus’. This is the ‘strict liability’ point advanced by CityFibre. CityFibre distinguishes ‘compensate’ in this ‘dictionary definition or common usage’ sense from that of the language concerning compensation, in respect of third parties (including private individuals) who would not be expected to be compelled to participate in a private dispute resolution process (arbitration), used elsewhere in the [1991 Act]. And, therefore, its claim, under s. 82, is subject to arbitration under s. 96 (3) and s. 99. Cadent’s position is that ‘compensate’ in s. 81 (1) means ‘compensation’ in terms of s. 96 (3). And that, therefore, the exclusion takes effect to disapply the arbitration provision. 32. I have told the parties, in my request for comment on the analogous legislation and on the relationship between s. 75 (5) (concerning arbitration provision on inspection fees) and the exclusion, that I perceived a potential for ambiguity within the [1991 Act]. I consider the wording is not straightforward, as contended by Cadent. It is odd for a statute to provide for arbitration and to then exclude the type of dispute that is evidently most suitable for that process (i.e. disputes arising under s. 82 (1)), as identified by the Court of Appeal in Yorkshire Electricity. 33. I interpret s. 82 (1)’s intention is to impose a strict liability on an undertaker (in the event of damaging a person’s apparatus) to pay an injured person his expense in repairing damage. That is what the wording (and its title) states. It enables the injured person to recover the expenses, of taking the action of repairing the damaged apparatus, from the undertaker, all of which, I consider, falls squarely within the ambit of s. 96 (1).34. On Cadent’s analysis, the payment of expenses in making good damaged apparatus would not be arbitrable whereas the administrative expenses would. I disagree with Cadent, that bifurcation is not in issue; CityFibre’s claim appears to comprise two parts (each for c.£3,500) in respect of the making good expenses and the administrative expenses. I find Cadent’s literalistic approach does not obtain a commercially sensible or predictable solution. Particularly where, as in the present matter, it would lead to the bifurcation of a claim, contrary to the principle identified in the Republic of Mozambique case report. I interpret s. 96 (3)’s exclusion’s referencing of ‘a right to compensation’ reflects a public policy purpose of avoiding compelling a private dispute resolution process on third parties (including private individuals), as contended for by CityFibre. I accept CityFibre’s point that the words, ‘shall compensate’, do not alter s. 82’s strict liability character.35. I also note the Court of Appeal’s dicta in Yorkshire Electricity, at paragraphs 47 and 48, where their Lordships explain how the relationship, between an undertaker and a person having apparatus, is to be conducted in a matter concerning a dispute under, specifically, s. 82 (1) (b) (the specific sub-sub-clause under which CityFibre’s claim is said to arise). The court was addressing five ‘test cases [which were] intended to generate general principles that could be used’ and ‘an urgent need for a protocol’ …36. I find the case informative, when interpreting the statute. I note Cadent’s comment concerning the court’s inability to order arbitration, identified in paragraph 48 of the judgment, but consider the court’s statement is not definitive, given the lack of clarity on whether either the court of first instance or the Court of Appeal were directed to consider the [1991 Act’s] arbitration provisions. Had they been so, I consider the case report would have addressed it and the ‘protocol’, there considered necessary, would have been arbitration pursuant to s. 96 (3) and s. 99.[35]In order to assist in understanding paragraph 31 of the arbitrator’s award, it is necessary to refer back to paragraph 16 (c), where the arbitrator sets out CityFibre’s submissions on the meaning of the word ‘compensate’ and its derivatives. These are said to be used in the 1996 Act in two separate ways, as follows:(1) First, in the common (or dictionary definition) usage (meaning to give someone something for a loss or injury incurred), which is how it is used in s. 82 (1).(2) Second, in relation to claims by third parties (including individuals) who are affected by public and street works, and who would not normally be expected to be subject to private arbitration, e g. where the 1991 Act confers exclusive jurisdiction on the Upper Tribunal in compulsory land purchase disputes.[36]I confess that I have difficulty in following the reasoning underlying the arbitrator’s view that two different meanings should be attributed to the word ‘compensate’ and its derivatives. This dual meaning featured quite prominently in his decision-making; but the basis for it is unclear to me. However, in his submissions, Mr Croall (for CityFibre) placed little, if any, reliance upon the arbitrator’s actual reasoning, as expressed in his partial award. Rather, he sought to uphold the arbitral tribunal’s decision on jurisdiction on other grounds.[37]In his oral submissions, Mr Liddell recognised that both Cadent and CityFibre had revised, and refined, their positions for the purposes of this s. 67 challenge. They are entitled to do so because a challenge under s. 67 proceeds by way of a de novo rehearing of the jurisdiction issue. For its part, Cadent no longer suggests, as it did in the lead-up to the partial award, that a claim for administrative expenses and overheads pursuant to s. 96 (1) of the 1991 Act is a separate claim to one for remedial costs and expenses under s. 82. Rather, Cadent's position, as set out in the claim form and Mr Mulgrave's witness statement, is that, properly construed, a claim for administrative expenses under s. 96 (1) would form part of a substantive claim for compensation under s. 82 (1). In other words, there is one composite claim which, on Cadent's case, would fall to be litigated in court. What has been described as the ‘bifurcation issue’ no longer arises. Thus, there is no longer a scenario whereby any s. 82 (1) claim or head of loss would fall to be litigated in court whilst a s. 96 (1) claim or head of loss would fall to be determined by way of arbitration. For CityFibre’s part, they no longer suggest that the word ‘compensate’ is used in two different senses.[38]Cadent’s position is that the arbitrator’s partial award is not persuasive; and that the arbitral tribunal was wrong to find that it had the necessary jurisdiction to determine this dispute.

The law relating to challenges under s. 67 of the 1996 Act

[39]Ss 94 to 95 of the 1996 Act apply s. 67 to statutory arbitrations, with the statute taking effect as if the arbitration arises pursuant to an arbitration agreement, and if the enactment were that agreement. It is common ground that the established principles relating to s. 67 challenges therefore apply to the determination of this application. Thus:(1) A challenge under s. 67 proceeds by way of a de novo rehearing of the jurisdiction issue. The arbitral award has no automatic legal or evidential weight. Since the arbitral tribunal has already considered the same issues, the court will examine the award with care and with interest. If, and to the extent that, the tribunal’s reasoning is persuasive, then there is no reason why the court should not be persuaded by it.(2) However, the court’s jurisdiction should not be fettered by the way the arguments were advanced before the arbitral tribunal, subject to the court’s general power to control the admission of evidence before it.

The interpretation of legislation

[40]Cadent’s challenge to the jurisdiction of the arbitral tribunal turns primarily upon the construction of the relevant provisions of the 1991 Act. Unsurprisingly, there is a large measure of agreement between the parties on the principles to be applied by the court when construing statutory provisions.[41]Mr Liddell emphasises that the overarching aim is to interpret the provisions in question in the context of the statute as a whole and its purpose. Cadent contends that the following familiar principles are therefore relevant to the court’s task:(1) Statutory interpretation is concerned with ascertaining the objective intention of Parliament. Cadent cites Regina (O) v Secretary of State for the Home Department and Regina (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department [2022] UKSC 3, [2023] AC 255, where (at paragraph 31) Lord Hodge DPSC said this: Statutory interpretation involves an objective assessment of the meaning which a reasonable legislature as a body would be seeking to convey in using the statutory words which are being considered. The primary indication of such intention is the legislative text itself “read in context and having regard to its purpose”: see Bennion Bailey and Norbury on Statutory Interpretation, 8th edn (2020), at paragraph 11.1 (1).(2) It is permissible to deploy aids to construction. Although these play a secondary role, they may cast light on particular statutory provisions, citing R (PRCBC) v Home Secretary per Lord Hodge at paragraph 30. Aids to statutory construction can include “the state of the law before the Act was passed, any report or other material that indicates the Act’s purpose, and the Act’s legislative history”: see Bennion at paragraph 24.1 (2). Mr Liddell submits that this includes the state of the law as it existed under the statute that preceded the 1991 Act. He points to sections of the majority judgment in Kostal UK Ltd v Dunkley [2021] UKSC 47, [2022] ICR 434, [2022] 2 All ER 607 at paragraphs 16-20 and 45, addressing the legislative history of the relevant statutory provision considered in that case. Mr Liddell also points to the statement at paragraph 24.5 of Bennion that: In order to understand the meaning and effect of a provision in an Act it is essential to take into account the state of the previous law and, on occasion, its evolution. Mr Liddell also refers the court to the following statement over the page, under the heading ‘Legislative evolution’: Where a subject has been dealt with by a developing series of Acts, the courts often find it necessary, in construing the latest Act, to trace the course of this development. By seeing what changes have been made in the relevant provision, and why, the court can better assess the provision's intended meaning.[42]In response, Mr Croall points to the first sentence of the commentary to paragraph 24.5 of Bennion: At its most basic level, the purpose of an Act is normally to make changes in the law. He also emphasises the further words of Lord Hodge in R (PRCBC) v Home Secretary at paragraph 30: But none of these external aids displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity.[43]In his oral submissions, Mr Croall identified the following five propositions which he says are to be derived from R (PRCBC) v Home Secretary:(1) The court is seeking the meaning of the words used in the statute as a whole. That is the exercise the court is undertaking.(2) That meaning must be identified in the context of the section as a whole, and the wider context of the other relevant provisions in surrounding sections of the Act.(3) The language used in the disputed, and other relevant, sections is the primary source of the meaning and the underlying purpose of those sections.(4) External aids which may cast light on the intention of Parliament are secondary. They can be of some assistance, principally when identifying the purpose of the provisions.(5) But such aids cannot displace the meaning of the language, when read in context and as a whole.[44]Mr Croall also relies upon Lord Bingham’s formulation of the following principle of statutory construction in R (Quintavalle) v Secretary of State for Health [2003] UKHL 13, [2003] 2 AC 687 at paragraph 8: The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed. But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. Such an approach not only encourages immense prolixity in drafting, since the draftsman will feel obliged to provide expressly for every contingency which may possibly arise. It may also (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute. Every statute other than a pure consolidating statute is, after all, enacted to make some change, or address some problem, or remove some blemish, or effect some improvement in the national life. The court’s task, within the permissible bounds of interpretation, is to give effect to Parliament’s purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment. In the same case, Lord Steyn emphasised that a purposive, rather than a literal, approach was to be taken.[45]This was reaffirmed by Lord Reed PSC and Lord Hodge DPSC, giving the lead joint judgment in Test Claimants in the FII Group Litigation v HMRC [2020] UKSC 47, [2022] AC 1. At paragraph 155, they said that: It is the duty of the court, in accordance with ordinary principles of statutory interpretation, to favour an interpretation of legislation which gives effect to its purpose rather than defeating it.[46]Mr Croall submits that this authority assists on the question of when, and in what circumstances, it is legitimate to favour a purposive construction. During his oral submissions, he placed this citation in the context of the preceding sentence of the joint judgment, where Lord Goff was criticised for failing to consider whether the result of the House of Lords’ decision in the case he was deciding would be consistent with Parliament’s intention in enacting the relevant statute. Mr Croall submits that it is a necessary part of the exercise of construing a statute – and, in this sense, it is different to construing a contract - to identify what the underlying purpose of the relevant section is. Then, having done that, if there are two competing constructions, and one is consistent, and the other inconsistent, with that purpose, the court is under a duty to favour that construction which is consistent with that purpose, so long as it is a legitimate, and available, construction.[47]In their joint judgment, concurring in the result, in Kostal UK Ltd v Dunkley [2021] UKSC 47, [2022] ICR 434, [2022] 2 All ER 607, Lady Arden and Lord Burrows repeated a similar point (at paragraph 109): The modern approach to statutory interpretation requires the courts to ascertain the meaning of the words in a statute in the light of their context and purpose … In carrying out their interpretative role, the courts can look not only at the statute but also, for example, at the explanatory notes to the statute, at relevant consultation papers, and, within the parameters set by Pepper v Hart …, at ministerial statements reported in Hansard. Mr Liddell referred me to the following passage in the lead judgment of Lord Leggatt (with whom Lords Briggs and Kitchin agreed) in the same case, at paragraph 30: First, as with any question of statutory interpretation, the task of the court is to determine the meaning and legal effect of the words used by Parliament. The modern case law … has emphasised the central importance of identifying the purpose of the legislation and interpreting the relevant language in the light of that purpose. Sometimes the context and background, or the statute viewed as a whole, provides clear pointers to the objectives which the relevant provisions were seeking to achieve. In other cases, however, the purpose needs to be identified at a level of particularity which requires it to be elicited mainly from the wording of the relevant provisions themselves. The present case is one in which, although the legal context and aim of seeking to secure article 11 rights is important, the somewhat complicated and elaborate wording of section 145B (and section 145D) calls, in my view, for a careful linguistic analysis on the assumption that the words used have been chosen with precision.[48]Mr Croall submits that, to the extent possible, a purposive, rather than a literal, approach to interpretation is to be followed; one which takes account of the other provisions of the statute, the relevant context and, so far as a clear purpose can be discerned, that purpose. Whilst it remains important to consider, and to apply, the meaning of the language used, the literal meaning must, where appropriate, yield to a meaning more consistent with the context and purpose of the provision.[49]Mr Liddell submits that if by the word ‘yield’, CityFibre is suggesting that the purpose of a statutory provision, insofar as this can be clearly discerned, takes priority over the actual language used, then this goes too far, and does not reflect the authorities. Whilst, of course, it is correct that an interpretation of legislation which gives effect to, rather than defeats, its purpose is to be favoured, this should not ignore, or relegate in importance, the actual, and precise, wording used by Parliament. I accept this submission as consistent with the statements in the authorities. As I have already indicated, in the course of his oral submissions, Mr Croall accepted that the court is only under a duty to favour that construction which is consistent with the purpose of the legislation if this is a legitimate and available construction. Mr Croall says that this is all that he meant when he used the word ‘yield’ in his skeleton argument.[50]Finally, Mr Croall refers to the presumption, in the context of agreements to arbitrate, that the parties are to be taken to intend that all issues arising out of the relevant relationship will fall within the scope of any arbitration. He refers, in particular, to Lord Hoffmann’s observations in the Fiona Trust appeal (Premium Nafta Products Ltd v Fili Shipping Company Ltd [2007] UKHL 40, [2007] Bus LR 1719, [2007] 4 All ER 951) at paragraph 13: In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction. As Longmore LJ remarked, at [17]:
‘if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.’
Mr Croall submits that a similar approach should be applied in the context of determining the intention of Parliament when it provides for statutory arbitration. Clear language is required if the court is to conclude that claims which may arise out of the same incident must be determined in different dispute resolution fora.[51]Mr Croall further submits that this approach is reflected in the reasoning in the Republic of Mozambique case, where the Supreme Court refused to treat defences to issues of quantum as falling within the scope of arbitration agreements when issues of liability were outside their scope. The arbitration agreements should not be construed as giving rise to such an irrational approach. Such considerations are relevant when undertaking the exercise of statutory interpretation.[52]Mr Liddell submits that reliance upon this principle is erroneous, and misplaced, in present circumstances. The authorities upon which CityFibre relies concern the construction of arbitration provisions in a commercial contract and, essentially, how the parties are likely to have intended any dispute arising out of their contractual relationship to be decided. But that is not the case here. The parties have not chosen to contract into the statute; and nor, of course, can they contract out of its provisions. Fiona Trust deals with arbitration agreements reached consensually between the parties; and, so Cadent maintains, that case has no relevance to the construction of a statutory arbitration provision. I cannot accept this suggested distinction. Unless the statutory provision clearly states otherwise, I cannot see why Parliament, any more than contracting parties, should have intended that claims arising out of the same incident should fall to be determined in different dispute resolution fora. However, all of this is now largely academic since Cadent no longer contends that the two limbs of its claim – the cost of making good the alleged damage, and the resulting administrative expenses and overheads – fall to be determined in different fora.[53]It is, I think, common ground that external aids to construction play a secondary role to the words actually used by Parliament. If it is not, then I would so hold.

Cadent’s submissions

[54]Cadent invites the court to allow its application, make the order sought on the substantive issue before it, and also award it its costs. It seeks an order setting the partial award aside, and declaring it to be of no effect, on the grounds that the arbitral tribunal had no jurisdiction to adjudicate upon the dispute between the parties. As summarised in its skeleton argument, Cadent submits that the arbitrator erred as follows (and consequently lacked jurisdiction):(1) The statutory scheme of the 1991 Act is clear: claims under s. 82 (1) are expressly excluded from arbitration by virtue of s. 96 (3). CityFibre and the arbitrator are wrong as a matter of interpretation.(2) Cadent’s interpretation is supported by two external aids to construction. The first is the state of the law before the 1991 Act was passed: the predecessor legislation, the Public Utilities Street Works Act 1950 (the 1950 Act) contained a similar exclusion to that for which Cadent now contends; and this has been carried across to the 1991 Act. The second is express guidance from the Department for Transport on dispute resolution under the 1991 Act.(3) The tribunal placed too much weight upon the decision in Yorkshire Electricity Distribution Plc v Telewest Ltd [2006] EWCA Civ 1418. The Court of Appeal’s comments in that case were obiter and should be narrowly interpreted. They do not bind this court. Further, there are other authorities (to which the arbitral tribunal was not referred) which support Cadent’s position.(4) A further issue arose between the parties before the arbitral tribunal – whether a claim for compensation under s. 82 (1) can be bifurcated from a claim for administrative expenses under s. 96 (1) (the bifurcation issue). This issue no longer arises: the statutory scheme, properly interpreted, provides that claims under s. 96 (1) for administrative expenses are a sub-set of a related claim under s. 82 (1) of the 1991 Act. However, if it does arise (as CityFibre contends), the tribunal incorrectly interpreted and applied the decision in the Republic of Mozambique case.[55]Mr Liddell also addresses the arguments of policy raised by CityFibre. He develops these submissions in his written skeleton argument as follows: (1) The Tribunal erred in its interpretation of the 1991 Act[56]Mr Liddell’s first, and key, submission is that the wording of the statutory scheme of the 1991 Act is clear, and that claims under both limbs (a) and (b) of s. 82(1) are expressly excluded from arbitration by virtue of s. 96 (3). The opening words of s. 82 (1) "An undertaker shall compensate … " expressly condition both limbs (a) and (b) of the sub-section. S. 82 (1) (b) is, of course, the enabling provision by which CityFibre claims its expenses in making good the damage which it says has been caused by Cadent.[57]Further, there is no warrant for suggesting that the term ‘compensate’ and its derivatives are used in the two different senses identified by the arbitral tribunal – a ‘dictionary definition’ usage and, additionally, to reflect ‘a public policy purpose of avoiding compelling a private dispute resolution process on third parties (including private individuals)’, as suggested at paragraph 34 of the partial award. This is because:(1) There is no textual support for such a position. The 1991 Act does not define the term ‘compensate’ or its derivatives. Had it been the intention of Parliament to use the term in two different senses, it would have made such a state of affairs clear on the face of the legislation.(2) The basis on which CityFibre sought to argue this distinction is unclear. At paragraph 16 (c) (ii) of its partial award, the arbitral tribunal records that the support for the second usage is based on instances where the 1991 Act “confers exclusive jurisdiction on the Upper Tribunal in compulsory land purchase disputes”. This reflects CityFibre’s earlier submissions in correspondence. However, there appear to be no such provisions in Part III of the 1991 Act (nor elsewhere in the legislation). Further, the exclusion in s. 96(3) only applies to Part III. The evidential basis for the tribunal’s assessment is therefore incorrect. (3) In addition to its use in s. 82 (1), ‘compensate’ is only used in two other sections in Part III (ss 79 and 84) as follows: (i) S. 79(4) (b). This provides that an undertaker is “liable to compensate any person in respect of damage or loss incurred by him in consequence of” that undertaker’s failure to comply with its duty to keep up-to-date records of its own street apparatus, or to make those records available for inspection when requested by another person executing street works. (ii) S. 84 (4) provides that an undertaker is “liable to compensate” a highway, bridge or transport authority (or vice versa) in respect of “any loss or damage” resulting from any failure to comply with: (a) any agreement reached with such an authority in relation to the implementation of major works and the avoidance of unnecessary delay, or (b) any decision of an arbitrator under s. 84 (3), which requires any dispute between the undertaker and the authority as to any of the matters mentioned in s. 84 (1) to be “settled by arbitration” (in default of agreement). Mr Liddell observes that it would be strange indeed if Parliament had intended there to be two definitions of the term ‘compensate’ when it is only used on three occasions in Part III of the 1991 Act.[58]Mr Liddell further points out that the arbitral tribunal’s analysis on this point would also produce unintended results: Presumably, on its view, claims under s. 79 (4) would benefit from the s. 96 (3) exclusion (intended to shield third parties from private dispute resolution). Yet the scope of s. 79 (4) is drafted in a similar way to s. 82 (1). Both impose a liability on the undertaker to compensate ‘any’ person. Mr Liddell submits that all three statutory provisions fall within the ‘carve-out’ provision at the end of s. 96 (3) and so are non-arbitrable and fall to be litigated in the courts.[59]In his oral submissions, Mr Liddell pointed out that CityFibre’s submissions produce a curious, and probably absurd, result. Their skeleton suggests that claims to compensation under s. 82 (1) (a) should be treated differently to those brought under s. 82 (1) (b). The former fall within the ‘carve-out’ in s. 96 (3), and so would fall to be litigated, whereas the latter fall under the mandatory arbitration regime. Cadent submits that this cannot be right. Because the same introductory wording is used for both paragraphs of s. 82 (1), they must both be subject to the same dispute resolution regime. Parliament cannot have intended otherwise.[60]On Cadent’s interpretation, any dispute concerning a provision “conferring a right to compensation” falls to be resolved by litigation rather than arbitration. The difficulty with CityFibre’s submissions is that they ignore the ‘carve-out’ at the end of the second limb of s. 96 (3) and focus solely upon the earlier parts of that sub-section. CityFibre’s interpretation impermissibly analyses the first part of s. 96 (3) in isolation, despite the existence of the ‘carve-out’ provision in the second sentence, and the fact that the language deliberately links the two sentences together. Nor does it engage with the reason why the exclusion has been included; and it offers no answers as to why the statute uses the term ‘compensate’ to condition the operation of both limbs (a) and (b) of s. 82 (1).[61]Mr Liddell therefore submits that the correct approach to ss 82 (1) and 96 (3) is that ‘compensate’, and its derivatives, all have a unitary meaning across Part III of the 1991 Act; and that all instances of its use benefit from the exclusion in s. 96 (3). The first part of s. 96 (3) provides for disputes concerning the recovery of costs and expenses to be referred to arbitration. This is reinforced by the opening words of the second part of s. 96 (3); but there is then an exclusion, or ‘carve-out’, in relation to any provision “expressed as … conferring a right to compensation”. Mr Liddell emphasises Parliament’s use of the phrase “expressed as”, which qualifies the words “conferring a right to compensation”. The use of this phrase is intentional and precise. It therefore requires that any provision that expressly confers a right to compensation falls within the ‘carve-out’ in the proviso to s. 96 (3). Cadent's position is straightforward. It submits that ss 82 (1) (a) and (b), which are both conditioned by the words "shall compensate", fall squarely within the ‘carve-out’ provision of s. 96 (3), as both provisions are “expressed as … conferring a right to compensation” on the injured party. By contrast, CityFibre’s position is that once a claim falls within the first part of s. 96 (3), because it concerns a claim “to recover costs or expenses incurred … in executing works”, you do not need to go on to consider the second part of the sub-section, which must be construed as referring to some other right to compensation. If a claim falls within the first part of s. 96 (3), it cannot fall within the ‘carve-out’ because it cannot fall within both. But that is to ignore both the language, and the purpose, of the ‘carve-out’, which expressly excludes any provision “expressed as … conferring a right to compensation” from the otherwise mandatory arbitration regime. The ‘carve-out’ clearly excludes provisions which expressly confer a right to compensation, such as the whole of s. 82 (1).[62]Mr Liddell submits that it is not necessary for Cadent to explain why Parliament chose not to provide for mandatory arbitration in relation to disputes under s. 82 (1). As is evident from the ‘carve-out’ provision, Parliament deliberately used the words "expressed as … conferring a right to compensation" to identify those claims that fall outside the arbitration regime, but otherwise confirmed that any other provision expressed as conferring a right to recover or imposing a liability to reimburse or indemnify would fall within the arbitration regime. Cadent submits that Parliament deliberately used this language to reflect the different wording of the different provisions. (2) Aids to construction[63]Mr Liddell submits that Cadent’s approach to construction is also supported by two further pieces of external evidence:(1) The state of the law prior to the enactment of the 1991 Act. S. 31(2) of the 1950 Act contained a similar provision for arbitration (and an exclusion for matters involving compensation), which appears to have been carried across to the 1991 Act: Where, on a claim under any provision of this Act which confers in any circumstances a right to payment of an amount equal to the cost reasonably incurred in respect of any matter, any question arises whether the cost in respect of which the claim is made was in fact incurred or was incurred in those circumstances or in respect of that matter, or as to the amount of any cost so incurred, or whether any cost so incurred was reasonably incurred, that question shall be determined by arbitration: Provided that this subsection shall not apply to a claim under the provisions as to compensation or indemnity of section eighteen, nineteen or twenty-six of this Act. S. 26 of the 1950 Act is one of the sections benefitting from the exclusion. It was concerned with works performed by undertakers which “are likely to affect other undertakers’ apparatus” (with an undertaker conducting works referred to as an ‘operating undertaker’). By virtue of s. 26 (6), an operating undertaker was required to “pay to owning undertakers compensation equal to the expense reasonably incurred by the owning undertakers of making good damage to apparatus of theirs to which this section applies which is caused by the execution lawfully of works to which this section applies of the operating undertakers …”. Disputes as to compensation under s. 26 (6) of the 1950 Act were explicitly precluded from being arbitrated pursuant to s. 31 (2). Mr Liddell submits that this ‘carve-out’ was substantially incorporated in the 1991 Act, strongly suggesting that the scope and applicability of that provision remain the same. Mr Liddell also referred me to extracts from a review of the 1950 Act by a Committee chaired by Professor Michael Horne OBE (the Horne Report). This was commissioned by the Secretary of State for Transport (and published in November 1985). However, I derive no real assistance from the Horne Report. Paragraphs 28.26 and 28.27 clearly favour the greater use of arbitration procedures, a recommendation which was accepted by the Government in its response to the Report. The extent to which this recommendation was implemented is clearly a matter of the true interpretation of the relevant provisions of the 1991 Act. (2) The Department for Transport has provided guidance on the operation of the 1991 Act in the form of the Code. In his written skeleton Mr Liddell suggested that this also supports, and is consistent with, Cadent’s position. Chapter 13 of the Code deals with dispute resolution. At paragraph 13.4, the Code states that: Disputes relating to matters covered by the following sections of [the 1991 Act] may be settled by arbitration, as provided for in section 99. Various provisions are then listed; but these do not expressly include disputes arising under s. 82 (1) (a) or (b). However, in oral submissions, Mr Liddell acknowledged that in his skeleton argument, Mr Croall had made some powerful points in relation to the Code. In particular, Mr Liddell acknowledged that s. 96(3) – ‘recovery of costs and expenses’ – is included as the last bullet-point. He also accepted that there were a number of provisions set out in the appendix to Cadent’s skeleton where, on its case, any dispute would be arbitrable, which are also not specifically identified in the list at paragraph 13.4 of the Code. Mr Liddell therefore accepted that the court was unlikely to gain much, if any, assistance from the Code in construing the provisions that were being debated before the court. For these reasons, and in agreement with both counsel, I consider that very little weight can be accorded to this piece of external evidence. (3) Yorkshire Electricity and other relevant authorities[64]The arbitral tribunal placed significant emphasis upon the Court of Appeal’s observations in the Yorkshire Electricity case concerning the process for dealing with disputes between an undertaker and the owner of damaged apparatus. At the end of his judgment (with which Sedley and Dyson LJJ simply agreed) Buxton LJ counselled that recourse to any court must be avoided in future, and that the process should instead be one of arbitration or expert determination. At paragraphs 47-48, he said this: First, recourse to any court must be avoided in future. Second, the process between the parties should not be one of mediation, which carries too much potential for the leisurely ventilation of extensive issues such as has occurred so far in this matter, but one of arbitration or, rather, determination by an expert. The parties should arrange to refer any dispute to a single engineer, agreed by them or in default appointed by the President of the Institute of Electrical Engineers, who will determine any dispute on the basis of short written submissions with photographs of the site. He will apply the principles set out in this judgment so far as they are relevant to the case, and because he will deal with every case he will rapidly become familiar with the issues. Because he will act as expert his decisions will not be subject to appeal. And as a body of decisions develops the parties should be less and less in need of his assistance. We cannot of course order or require any of this. However, should the parties reappear in court, and the more so in this court, in circumstances that have led them to litigation because of a failure to operate the system that we and, in essence, the judge have suggested, they are likely to receive short shrift, and certainly to encounter an unsympathetic approach to costs.[65]Mr Liddell points out that the appeal in that case involved a dispute between an undertaker (Yorkshire Electricity) and a cable television company (Telewest) about damaged network cables. Telewest claimed to recover the cost of damage to its ducting which had been damaged by Yorkshire Electricity in the course of repair works. The costs claimed in that case were relatively small, but the Court of Appeal accepted that it was a form of ‘test case’. At a superficial level, therefore, the background to the Yorkshire Electricity case bears some similarity to the present case.[66]However, the central points of law before the Court of Appeal were both different and narrow: they concerned whether Telewest’s prior conduct meant that Yorkshire Electricity should benefit from the exclusion from liability in s. 82 (4) (which applies where loss or damage is ‘attributable’ to another party’s misconduct or negligence) and what constituted ‘damage’ for the purposes of s. 82 (1) (b). Only once those issues had been resolved did the court provide guidance on how it viewed the operation of the statutory scheme.[67]Mr Liddell submits that the arbitral tribunal was wrong to place significant weight on the Yorkshire Electricity case and to comment on what the outcome of that case would have been had the Court of Appeal been made aware of ss 96 (3) and 99. The Court of Appeal’s comments were obiter, and were recognised as such when Buxton LJ commented (at paragraph 48) that:
“We cannot of course order or require any of this …”
. Further, the report of the case does not indicate that the Court of Appeal had received any submissions on how s. 82 (1) interacted with ss 96 (3) or 99 of the 1991 Act. Nor is there any indication that these provisions were cited to it.[68]The Court of Appeal considered that s. 82 (1) imposes ‘absolute or strict’ liability. However, this does not explain how the exclusion in s. 96 (3) operates. Instead, the operation of that provision depends on the wording of the relevant ‘enabling provision’ and whether it falls within the scope of the ‘carve-out’.[69]The Court of Appeal’s obiter comments also suggest that one arbitrator should be appointed to hear all disputes between the same parties. However, there is no warrant in the legislation for this eventuality; and the parties before the Court of Appeal do not appear to have been given any opportunity to comment on this point. Accordingly, Mr Liddell submits that the arbitral tribunal fell into error when it placed significant weight upon Buxton LJ’s obiter comments. Further, this court is not bound by, and should not follow, Buxton LJ’s observations in Yorkshire Electricity. Instead, the better approach should be for this court to have regard to three other authorities which, although not before the arbitral tribunal, have examined the statutory scheme in more detail. These are said to support Cadent’s position.[70]The first is British Telecommunications Plc v Bell Cable Media (Leeds) Ltd [2001] BLR 343, a decision of HHJ McGonigal, sitting in the Leeds Mercantile Court. The case concerned claims by BT under s. 82 (1) (b) of the 1991 Act for damage to its apparatus caused by Bell. Liability was admitted so the matter proceeded to a trial on quantum. This was complicated by the fact that the case pre-dated the 2002 Regulations so the court was required to determine what was recoverable as an ‘administrative expense’. At paragraph 1 of his judgment, HHJ McGonigal described the decision as “a test case to establish the principles upon which compensation payable for damage to BT apparatus under the provisions of [the 1991 Act] should be calculated …”. At paragraph 4.21, compensation was said to comprise “any expense reasonably incurred by [the] owner in making good the damage” and “an appropriate proportion of any administrative expense of the owner”.[71]The second authority is Road Management Services (A13) Plc v London Power Networks Plc [2003] BLR 303, a decision of Forbes J sitting in the Technology and Construction Court. There, the court directly examined the scope of s. 96 (3). Indeed, Mr Liddell indicates that this case is the only authority that counsel have been able to find that deals specifically with s. 96 (3) of the 1991 Act. The underlying claim in that case involved a dispute between the parties about diversionary works, and their impact on certain electrical equipment. The defendant sought a stay of the proceedings under s. 9 of the 1996 Act. The court had to consider whether the dispute was arbitrable, and, if so, whether a stay should be granted. The court therefore examined the scope of s. 96 (3). At paragraph 38, Forbes J held that: When section 96 (3) is read as a whole, it is clear that it is only concerned with the arbitration of disputes about the various obligations to pay moneys for which provision is made in the various sections of Part III of [the 1991 Act], in particular those mentioned in paragraph 33 above. – This would appear to be an incorrect cross-reference; it should refer to the list provided by leading counsel at paragraph 35 – I agree with [leading counsel for the claimant] that the words of section 96 (3) cannot be construed so as to embrace a dispute between the parties as to whether [the 1991 Act] applies in the first place. The court concluded: In my view, the word ‘circumstances’ is thereby expressly limited to such circumstances as give rise to an entitlement to moneys under one or other of the various relevant sections of Part III of [the 1991 Act], and, thus, do not include circumstances that merely determine whether the Act applies at all. Thus, the dispute that was the subject-matter of the proceedings did not come within the terms of s. 96 (3) at all, and so was not arbitrable. The result was that the mandatory stay provisions of s. 9 of the 1996 Act had no application.[72]In his skeleton argument, Mr Liddell submitted that it is no answer to the Road Management Services case to argue that the judgment was concerned with whether the 1991 Act applied at all. The court conducted an examination of the scope of the exclusion in s. 96 (3) (which it did not, and was not required to, do in Yorkshire Electricity). This constituted a central part of the judge’s reasoning; and it accords with Cadent’s interpretation. In his oral submissions, and after sight of Mr Croall’s skeleton argument, drawing attention to the use of the phrase ‘in particular’, Mr Liddell was rather more circumspect. He emphasised the fact that leading counsel in that case had not included s. 82 (1) in the provisions that fall to be arbitrated; and Forbes J had accepted those submissions. But Mr Liddell accepts both that Forbes J referred to those provisions identified by leading counsel ‘in particular’; and that the court was not specifically considering whether or not claims under s. 82 (1) fall to be arbitrated. So Mr Liddell accepts that the court may find this authority to be of limited assistance, although he considers that it is certainly a case which should be drawn to the court’s attention in relation to s. 96 (3).[73]The final case in this trilogy of authorities is Southern Gas Networks Plc v Thames Water Utilities Limited [2016] EWHC 1669 (TCC), [2018] EWCA Civ 33, [2018] 1 WLR 5977, a decision of the Court of Appeal, delivered by Hickinbottom LJ, which reversed the decision at first instance of Mr Martin Bowdery QC. The case postdates Yorkshire Electricity. It involved a claim under s. 82(1) (b) by the claimant gas company, whose pipes were damaged when the defendant’s water main burst. The claimant was obliged to make compensation payments to its customers under relevant gas regulations; and it sought to recover these payments from the water undertaker under s. 82 (1) (b). At first instance, the trial judge concluded that such payments were not “expenses reasonably incurred in making good the damage” for the purposes of s. 82 (1) (b). The Court of Appeal agreed with that analysis; although it proceeded to reverse the trial judge’s decision on the alternative ground that the statutory remedies conferred by the 1991 Act do not oust any common law remedies that may be available to the owner of street apparatus. In arriving at its conclusion, Mr Liddell points out that the Court of Appeal considered the statutory scheme in Part III of the 1991 Act, and was specifically referred to Yorkshire Electricity (although admittedly on the different point of whether s. 82 (1) ousted any remedy at common law). Mr Liddell submits that, notwithstanding Yorkshire Electricity, the Court of Appeal (1) countenanced the claim proceeding by way of litigation, rather than arbitration; and(2) (at paragraph 24) approved of the decision at first instance, which (at paragraph 22) had described s. 82 (1) as providing for a “wide liability to compensate” the relevant authority.[74]In my judgment, the second limb of Mr Liddell’s submission involves a mis-reading of the relevant passage in Mr Bowdery QC’s judgment, which distinguished between the width of claims under paragraphs (a) and (b) of s. 82 (1). Paragraph 22 of his judgment reads as follows: 22. Whereas in section 82(1) (a) there is a wide liability to compensate the street authority or other relevant authority in respect of any damage or loss a very much limited compensation is required under section 82 (1) (b) to be provided to undertakers such as the claimant. Section 82 (1) (a) is wide enough to include consequential financial losses. Section 82 (1) (b) is much more restrictive and excludes consequential financial losses. The expression ‘expenses reasonably incurred in making good damage’ can, in my opinion and I so find, only relate to the expenses incurred in the execution of the necessary remedial works. The expression is not wide enough to include the modest compensation payments paid to customers who have lost their gas supply for long enough to trigger the FSG payments. These FSG payments are not required to be made as a result of the execution of remedial works in order to make good damage. They are paid because the supply of gas has been discontinued. It was not the need to remedy physical damage which gave rise to the claimant's liability to make these payments. It was the interruption of the gas supply which triggered these payments. These payments will continue until the making good has been completed, but on the proper construction of the statute, the making good does not cause the claimant's obligation to pay FSG payments to its customers. This would seem to me to be consistent with paragraph 20 of the judgment of Hickinbottom LJ in the Court of Appeal, where this analysis was endorsed. This reads: 20. Under section 82 (1) (a), a street authority may recover ‘any damage or loss’ it suffers as a result of works undertaken by a services undertaker or a section 82(2) event. Section 82 (1) (b), which applies to claims by ‘any other person having apparatus in the street’ (such as another service provider), is clearly more restricted: such a person can only recover ‘expenses reasonably incurred in making good damage’. Unlike the parallel provision in section 82 (1) (a), this clearly excludes financial losses suffered consequent upon the physical damage. That is the ordinary meaning of the words used, made more abundantly clear by the use of the words ‘expenses’ and the inclusion of the concept of ‘reasonableness in section 82 (1) (b).[75]On my reading of those two citations, both courts were recognising that the liability to compensate the owners of street apparatus under s. 82 (1) (b) is more restricted than the liability to compensate street or other authorities under s. 82 (1) (a). It is with the former liability (under paragraph (b)), rather than the latter, that this court is presently concerned. It is correct that the deputy judge (but not Hickinbottom LJ) spoke in terms of ‘compensation’. However, he was doing no more than mirroring the language of s. 82 (1). It is also true that the Court of Appeal upheld a claim for compensation that had been brought in the civil courts, rather than by way of a reference to arbitration. However, the procedure adopted by the claimant in that case was not the subject of any challenge. The case is no authority for the proposition that a claim for compensation under s. 82 (1) (b) is only capable of determination in the civil courts, rather than by way of arbitration. (4) The bifurcation issue[76]Mr Liddell submits that on analysis, the bifurcation issue does not arise. Cadent’s position is that, properly construed, a claim for administrative expenses under s. 96 (1) would form part of a party’s substantive claim for compensation under s. 82 (1). It is a sub-set of any claim brought under the latter sub-section. Thus there would be one composite claim that, if necessary, would fall to be litigated in court.[77]Mr Liddell submits that s. 96(1) is not a provision which confers any independent right to compensation or recovery in the same way as other ‘enabling’ provisions in Part III. Rather, s. 96 is concerned with the mechanisms by which such costs and recoveries may be obtained. Mr Liddell relies upon the following: (1) The title to s. 96 indicates as much (‘Recovery of costs or expenses’).(2) The text confirms the same point. S. 96 (1) provides that where recoveries are made under Part III, they will “include” administrative expenses, with those expenses being calculated in accordance with the 2002 Regulations.(3) Put another way, a party would not be able to found a claim solely for administrative expenses under s. 96 (1). Such a claim must necessarily be part of, and parasitic upon, a broader claim under the enabling provisions of Part III (of which s. 82 (1) is one). This position is expressly supported by observations of HHJ McGonigal in British Telecommunications v Bell Cable Media (cited above) at paragraphs 4.7 and 4.12. At paragraph 4.7, HHJ McGonigal said this: Although the undertaker’s liability under section 82 (1) is limited to paying compensation for ‘any expense reasonably incurred in making good damage to that apparatus’ section 96 (1) provides for that compensation to include indirect expenses that might not otherwise be regarded as ‘incurred in making good damage to that apparatus’. Later, at paragraph 4.12, Judge McGonigal said this: The phrase ‘shall be taken to include’ indicates that administrative expenses that would otherwise not be regarded as part of the expenses of making good the damage are to be so regarded so long as they are relevant to the act of making good the damage. This extends the meaning of ‘any expense reasonably incurred in making good damage to that apparatus’ in two ways. First, the range of expenses ‘incurred in making good damage’ is extended to include administrative expenses that might otherwise be regarded as too remote from the process of damage repair. An example would be the costs of administering the engineers’ pay roll. The extension to include overheads can bring in the accommodation costs of the engineers. The second way in which section 96 (1) extends the range of expenses recoverable is by allowing the inclusion of administrative expenses, including general staff costs and overheads, if they are relevant to the process of damage repair, even though they are not an expense incurred in making good the damage. For example, the costs of producing an invoice to the damager are not an expense of making good the damage; the damage has been made good by the time the invoice is prepared and invoicing contributes nothing to the process of physical repair. But invoicing is an administrative expense that is clearly relevant to the act of making good the damage and, therefore, is to be taken as a recoverable expense. Finally, at paragraph 4.21, the court summarised the position under the 1991 Act. The court referred in express terms to the liability of an undertaker who damages apparatus in a street to compensate the owner of that apparatus for (a) the various expenses reasonably incurred by that owner in making good the damage, and then, at (b), for an appropriate proportion of any administrative expenses of the owner (including overhead expenses and staff costs of a general nature) that is reasonably incurred for the general purposes of the owner’s business in the process of making good the damage.(4) It therefore makes eminent sense for the entire (broader) claim to be dealt with as prescribed in s. 96 (3). Applied to this case, the result is straightforward. A s. 82 (1) claim is compensatory, and is determined by court litigation, with any administrative expenses claimed being part of that broader claim, and calculated in accordance with the 2002 Regulations.[78]However, if (contrary to Cadent’s principal contention) the court considers that the arbitral tribunal was correct (so that the bifurcation issue remains live in this case), Cadent’s fall-back position is that the tribunal did not apply the reasoning in the Republic of Mozambique case correctly. In that decision, Lord Hodge DPSC (speaking with the agreement of the other members of the Supreme Court) observed (at paragraphs 107-108) that the parties to a contract, as rational businesspeople, should not be treated as having agreed to refer to arbitration a subordinate factual issue arising in legal proceedings in which the underlying legal claims are beyond the scope of the arbitration agreement. Lord Hodge observed: … The question for the court is whether the partial defence on quantum arising in the context of these legal proceedings, in which the legal claims are not within the scope of the arbitration agreements, is a matter which the parties are to be treated as having agreed to refer to arbitration. In my view, it is not. Section 9 of the 1996 Act is to be applied with common sense. Rational businesspeople would not seek to send to arbitration such a subordinate factual issue arising in such legal proceedings and the arbitration agreements must be construed accordingly. While each case must be assessed in the light of its particular circumstances, I am supported in this conclusion by the fact that there are no recorded cases under section 9 of the 1996 Act of the court granting a partial stay of legal proceedings for the determination by an arbitral tribunal of a dispute about the quantification of damages claimed in those legal proceedings in which the contested legal claims were beyond the scope of an arbitration agreement. In other words, there is no evidence of court decisions effecting the bifurcation of a dispute as to quantification of damages from contested claims as to liability.[79]CityFibre’s argument is that the Republic of Mozambique case should be used, by way of analogy, to determine the intention of Parliament. Yet, Mr Liddell submits, an appeal decided in 2023, which concerned the scope of a contractual arbitration provision, governed by Swiss law, is not the best guide to the interpretation of highways legislation drafted in the early 1990s.[80]In any event, if the court were to accept that the decision in Republic of Mozambique is relevant to the task of interpretation, Mr Liddell submits that, properly construed, it does not produce the outcome contended for by CityFibre. At paragraph 108, the court observed that it was not aware of any case where legal proceedings dealing with liability had been stayed pending the determination of quantum by an arbitral tribunal. In such circumstances, it held that there should be no bifurcation.[81]Applied to the present case, therefore, a claim under s. 82 (1) for compensation should not be bifurcated in favour of an arbitral tribunal which is to determine an ancillary issue (such as administrative expenses due under s. 96 (1)). Instead, the whole matter should properly be dealt with by the courts. (5) Policy arguments[82]In her witness statement, Ms Cook raises a number of policy arguments which seek to explain why arbitration is preferable to court litigation. Mr Liddell submits that these arguments cannot overcome the correct approach to interpretation and the application of authority. Such arguments are neither relevant to, nor determinative of, this court’s construction of, or any decision about how, the relevant statutory provisions should be interpreted or applied. Even if this court were minded to prefer CityFibre’s analysis that arbitration provides a more cost-effective and proportionate route, but, despite this, the true interpretation of the relevant statutory provisions leads the court to conclude that claims under s. 82 (1) fall to be litigated rather than arbitrated, it is ultimately a matter for Parliament, preferably after industry-wide consultation, to revisit, and amend, the wording of s. 96 (3), should it consider arbitration to be preferable to litigation.[83]Turning to the merits of these policy arguments, in paragraph 5 of his second witness statement, Mr Mulgrave acknowledges that, in large part, claims under s. 82 (1) (b) of the 1991 Act are high-volume, low-value claims. However, his own experience of acting for Cadent in relation to such small claims is that they are typically very straightforward; and it is not unusual to see particulars of claim containing little more than five sentences explaining the basis for the claim and its factual aspects. Cadent rejects CityFibre’s assertion that the small claims process would prove to be inadequate for the resolution of such disputes.[84]Mr Liddell points out that if CityFibre’s claim against Cadent had been correctly commenced in the courts:(1) The claim would have been allocated to the small claims track.(2) There would have been an issue fee of £455 (since the value of the claim is more than £5,000 but less than £10,000). This is comparable to the administrative cost of an application for an ICE arbitrator (of £420, inclusive of VAT).(3) A hearing fee would be payable in the sum of £346. Mr Liddell points out that Mr Mackinnon charges £350 (plus VAT) for each hour he is engaged as arbitrator.(4) Although the admission of expert evidence requires the express permission of the court beforehand, it may be allowed in an appropriate case.(5) There is some limited costs recovery in small claims track trials. In accordance with CPR 27.14 and PD27A, various costs would (in principle) be recoverable at the conclusion of the case, including: (a) the fixed costs attributable to issuing the claim; (b) court fees; (c) party and witness expenses reasonably incurred in travelling to and from any hearing; (d) a sum, not exceeding the amount specified in PD27A (£750), for the fees of an expert; and (e) such further costs as the court may assess by the summary procedure and order to be paid by any party who has behaved unreasonably.(6) In any event, even if the court were attracted to the argument that arbitration is preferable to court litigation, it is ultimately a matter for Parliament to decide whether to amend the 1991 Act. Present delays in bringing a case to trial in the courts do not, of themselves, assist the court when interpreting the intention of Parliament back in 1991, when the provisions of s. 96 (3) were first enacted. Further, if it is right that a small claim will not get on for trial for about a year, that, in itself, may prove to be an incentive for either party to settle: First, in relation to a claimant, because of their wish to achieve the resolution of their claim. Secondly, in relation to a respondent, because they will be facing interest on the claim.[85]On the eve of the hearing of this arbitration claim, Mr Forzani carried out some research into the question whether there had been a small claims procedure back in 1991. By s. 64 of the County Courts Act 1984, County Court Rules might prescribe cases in which proceedings were automatically to be referred to arbitration. Prior to 30 June 1991, the County Court Rules provided that any proceedings in which the sum claimed, or amount involved, did not exceed £500 were automatically to stand referred for arbitration by the registrar upon the receipt by the court of a defence to the claim. That base figure was increased to £1,000 with effect from 1 July 1991. Mr Liddell indicates that the present value of £500 in 1991 would be in the range of £1,500 to £1,900 so a claim of the present kind would be likely to have fallen to be litigated unless the parties expressly agreed to refer it to arbitration. On any automatic reference to arbitration, by CCR Order 19 r. 6 (1), no solicitors’ charges would be allowed as between party and party save for the fixed costs on the summons, any witness allowances, the costs of enforcing the award, and such further costs as the arbitrator might direct where there had been unreasonable conduct on the part of the opposite party. Mr Liddell acknowledges that this further information is unlikely to take the court’s analysis much further.[86]For all these reasons, Cadent invites the court to set aside the relevant paragraphs of the partial award and declare them to be of no effect on the basis that the arbitral tribunal had no jurisdiction to determine the underlying dispute between the parties. Cadent also seeks a variation of the tribunal’s costs order such that CityFibre should pay:(1) Cadent’s costs of the arbitration proceedings (including the costs of the jurisdiction challenge), which, unless agreed, should be determined by the tribunal,(2) the tribunal’s costs, and(3) the costs of this arbitration claim.

CityFibre’s submissions

[87]Mr Croall invites the court to dismiss the challenge to the arbitral tribunal’s jurisdiction, uphold Mr Mackinnon’s partial award, and order Cadent to pay the costs of this s. 67 challenge. He describes this application as turning upon a short, but not straightforward, point of statutory construction in relation to s. 96 (3) of the 1991 Act. In simple terms, if the claim in the underlying arbitration falls within the first part of that subsection, then the arbitrator was right. If, however, it is excluded by the ‘carve-out’, then this claim is well founded.[88]Mr Croall identifies the short question for the court as depending upon the scope of ss 82 (1) (b) and 96 (3) of the 1991 Act. The latter subsection begins: Where under any provision of this Part a person is entitled in certain circumstances to recover costs or expenses incurred by him in executing works or taking other steps, any dispute as to the existence of those circumstances or as to the amount recoverable shall be determined by arbitration. This language is clear. The statutory arbitration of any disputes falling within the scope of this provision is mandatory. A claim brought under s. 82 (1) (b) is just such a claim. That subsection provides that any person with apparatus in the street may recover costs and expenses reasonably incurred in making good damage to that apparatus. It provides an explicit entitlement to such a person to recover costs and expenses incurred in executing works or taking other steps (i.e. in making good damage to the apparatus).[89]Mr Croall submits that this conclusion is underscored by the following:(1) Ss 82 (3) and (4) describe this entitlement as a liability of the undertaker;(2) As a matter of authority, s. 82 (1) gives rise to a strict liability to reimburse any costs and expenses incurred; and(3) The opening language of the second part of s. 96 (3) makes it clear that any such dispute will be subject to statutory arbitration whether “… the provision is expressed as conferring a right to recover, or as imposing a liability to reimburse or indemnify or to bear the cost”.[90]It follows that any claim under s. 82 (1) (b) must be pursued by way of arbitration in accordance with s. 99 of the 1991 Act. Since such a claim falls within the first part of s. 96 (3), it cannot be one which is not subject to arbitration pursuant to the proviso in the second part of s. 96 (3). Mr Croall submits that the point is short and is very clear. It disposes of this claim.[91]Mr Croall contends that there are additional reasons to prefer this construction, and hence the conclusion reached in the partial award:(1) In s. 96 (3), Parliament has stated, in the clearest possible terms, its intention that claims for the recovery of costs and expenses incurred in executing works, or taking other steps, are to be subject to statutory arbitration.(2) A s. 82 (1) (b) claim is likely to be one of the most common, and frequently advanced, statutory claims for the recovery of costs and expenses incurred in executing works or taking other steps. It is likely to be the principal example of the type of claim which Parliament intended to be the subject of compulsory statutory arbitration. CityFibre’s construction reflects this, whereas that contended for by Cadent would undermine that intention. Hence it is inconsistent with the true purpose of the provisions in Part III of the 1991 Act.(3) The structure of s. 96 (and particularly s. 96 (1), which applies to any provision enabling a person to recover the costs and expenses of taking any action) strongly suggests that the right to recover administrative expenses is something which will arise in those cases which fall within the first part of s. 96 (3), and is therefore subject to arbitration. Claims for such expenses typically form part of a claim under s. 82 (1) (b). The structure of s. 96 therefore suggests that such a claim falls within the first part of s. 96 (3) and so is subject to arbitration.(4) It is no answer to this point to suggest that only aspects of the quantification of a claim (i.e. those relating to administrative expenses) fall within the first part of s. 96 (3) and so are subject to arbitration. As Mr Mackinnon notes in his partial award, it would be very odd indeed if some aspects of a claim under s. 82 (1) (b) were to be the subject of arbitration proceedings whilst other aspects were not. Such a result would be irrational (to adopt the language of the Supreme Court in the Mozambique case). This is therefore not a plausible construction.[92]Finally, Mr Croall contends that CityFibre’s construction is likely to be consistent with the underlying purpose behind the expressed intention of Parliament. That is for the effective resolution of this type of claim, where all that is involved in almost all cases is an assessment of the costs which were in fact incurred in making good damage incurred or taking related steps. This is more fully set out at paragraphs 14-16 of Ms Cook’s witness statement. In summary:(1) Claims under s. 82 (1) (b) are often of low value but are very numerous (thousands every year). Parliament cannot be taken to have intended that these claims should clog up the county court system.(2) It is important that there should be a cost-effective process to determine such disputes, so as to ensure their speedy resolution and provide an incentive to settle. Time is money. It tends to have a correlation with legal costs; but, in any event, a defendant to a claim under s. 82 (1) (b) has an interest in holding onto their money for as long as they can, like any other defendant, whereas a claimant wants to receive their money as quickly as possible.(3) Statutory arbitration (typically involving surveyors or other appointees with similar technical expertise) provides a regime that usually allows for cost effective and speedy resolution of such claims. This is partly because the procedure can be tailored appropriately for claims which are typically of low value, and do not ordinarily give rise to complex issues. This is especially so where, as is often the case, a technical person is appointed as arbitrator, with the result that detailed technical evidence is either not required or can be limited. Moreover, such costs as are incurred can be recovered. These features also tend to encourage the settlement of these disputes.(4) A respondent seeking to delay the point at which it is held liable has an incentive to seek to ensure that these types of claims are brought through the court system rather than arbitration. The procedure in the small claims and county courts is rarely proportionate to the sum in dispute; and generally claims take longer to be resolved, and at greater cost.[93]In this context, Mr Croall argues that it is striking that in the Yorkshire Electricity case (at paragraph 47) the Court of Appeal expressed the clear view, in the context of claims under s. 82 (1) (b), that “ … recourse to any court must be avoided in future … the process between the parties should not be one of mediation, which carries too much potential for the leisurely ventilation of extensive issues such as has occurred so far in this matter, but one of arbitration or …. determination by an expert.”[94]Cadent’s arguments in response do not grapple with the most important point. That is that the use of the court system is likely to give rise to delays (both to the parties and to other court users) and to cost inefficiencies. It is Parliament’s clearly expressed intention that disputes of this kind are not to be resolved in court. Cadent’s construction frustrates that intention.[95]Cadent contends that the ‘carve-out’ contained in the second part of s. 96 (3) applies to any claim under s. 82 (1) (b) and, for this reason, that such disputes are not within the main part of s. 96 (3). The language relied upon by Cadent reads “... but does not apply in relation to a provision expressed as providing for the charging of a fee or conferring a right to compensation or in relation to section 78 (contributions to cost of making good long-term damage to the street)”.[96]This language indicates that statutory arbitration will not apply in three distinct scenarios. The first is where there are disputes relating to provisions which involve the charging of a fee, i.e. in relation to ss 74 and 75. The second is to disputes in relation to s. 78. The third is to disputes in relation to a provision conferring a right to compensation. There is no suggestion that either of the first and second scenarios are applicable to this case. However, it is possible to see why they would not fall within the first part of s. 96 (3). A right to charge a fee has nothing to do with the recovery of costs or expenses incurred in making good damage to apparatus and the like. The same is true of s. 78, which relates to regulations requiring undertakers to contribute to the long-term costs of highway maintenance.[97]The final scenario, which is relied upon by Cadent, is in relation to a provision conferring “... a right to compensation”. Cadent suggests that this includes any claim under s. 82 (1) because the language of that section starts with the words “an undertaker shall compensate”, with the consequence that such a claim is not subject to mandatory statutory arbitration.[98]Mr Croall submits that the problem with Cadent’s construction is that it asserts that a claim under s. 82 (1) (b) is not subject to mandatory arbitration but it does not grapple with, or explain, why such a claim is not one entitling a person to recover costs and expenses incurred in carrying out certain works, i.e. one falling within the careful and clear definition set out in the first part of s. 96 (3). Such a claim cannot fall within both parts of s. 96 (3). It is therefore necessary for Cadent to offer a coherent explanation as to why a claim under s. 82 (1) (b) is not within the first part of s. 96 (3). None has so far been put forward; and it is not easy to see what the explanation might be.[99]Moreover, Mr Croall argues that the expression ‘a right to compensation’ in the second part of s. 96 (3) cannot be construed as including any right which falls squarely within the first part of that subsection. The relevant language “a right to compensation” is part of a ‘carve-out’ from the general position in the first part of s. 96 (3). It must therefore be construed as a right to compensation other than one which falls within the first part of s. 96 (3) i.e. a claim to be repaid costs incurred in executing works, such as repairing damage to apparatus in the street.[100]Mr Croall contends that such a construction is available because there are other distinct rights to compensation in Part III of the 1991 Act (in ss 79 (4) (b), 82 (1) (a) and 84 (4)), where the right to compensation does not necessarily relate to the recovery of costs or expenses incurred in executing works. It is therefore necessary (and possible) to construe the expression “a right to compensation” in the second part of s. 96 (3) as being confined to compensation under those provisions. Such a construction gives effect to the whole of s. 96 (3) and avoids the necessary inconsistencies, and thus the difficulties, inherent in Cadent’s construction. Indeed if “a right to compensation” is construed as broadly as Cadent contends, it is not easy to see why the rights to reimbursement or recovery of costs set out elsewhere in Part III (including those which Cadent appears to accept are subject to arbitration) are not also rights to compensation. That cannot be right because then no claims would be subject to statutory arbitration.[101]Mr Croall began his oral submissions by emphasising some of the language of s. 96 (3). He emphasised that the first part clearly identifies that whenever a claim arises to recover cost and expenses incurred in executing works permitted by any provision of Part III, any dispute shall be the subject of mandatory statutory arbitration. The second part starts with language of inclusion, but then creates a ‘carve out’, covering three different types of exclusion. Mr Croall emphasises that whilst the draftsperson has expressly excluded claims under s. 78, there is no obvious equivalent for s. 82. Hence the debate is about the meaning and effect of the phrase “conferring a right to compensation”. This requires a careful consideration of s. 82. This covers two very different types of circumstances. S. 82 (1) (a) addresses the circumstance where a street, or other relevant, authority is entitled to claim in respect of any loss or damage it may have suffered in that capacity. Such claims are made by a specifically defined type of person, suffering damage or loss in a specifically defined capacity. It is not the type of claim seen at s. 82 (1) (b), which is one that will be made by someone having apparatus in the street. That claim is one for the recovery of expenses reasonably incurred in making good damage to that apparatus. The claim is limited, and confined, to the recovery of such expenses. That is how the Court of Appeal characterised the claims in the Southern Gas case when (at paragraph 20) they analysed the difference between claims under s. 82 (1) (a) and (b) as follows: Under section 82(1)(a), a street authority may recover ‘any damage or loss’ it suffers as a result of works undertaken by a services undertaker or a section 82(2) event. Section 82(1)(b), which applies to claims by ‘any other person having apparatus in the street’ (such as another service provider), is clearly more restricted: such a person can only recover ‘expenses reasonably incurred in making good damage’. Unlike the parallel provision in section 82(1)(a), this clearly excludes financial losses suffered consequent upon the physical damage. That is the ordinary meaning of the words used, made more abundantly clear by the use of the words ‘expenses’ and the inclusion of the concept of ‘reasonableness’ in section 82(1)(b). Mr Croall focuses upon the distinct difference between claims under s. 82 (1) (a) and (b). These are different animals; they are different types of claim. S. 82 (1) (b) gives rise to a right to the recovery of expenses reasonably incurred in making good damage to the claimant’s apparatus.[102]Mr Croall emphasises two non-controversial points concerning s. 82 (1) (b). First, it gives rise to a regime of qualified strict liability. Second, claims under that paragraph are limited to the costs of making good damage to apparatus in the street[103]Mr Croall emphasises that Cadent’s case turns entirely upon the ‘carve-out’ at the end of s. 96 (3). If that was not there, any claim under s. 82 (1) (b) would clearly fall within the scope of the mandatory submission to arbitration otherwise provided for by s. 96 (3). So the real issue for the court is whether the language of the ‘carve-out’ has the effect for which Cadent contends, and takes a claim that would otherwise fall squarely within s. 96 (3) outside it.[104]Mr Croall submits that s. 96 (3) evinces a very clear purpose and intention. That is that Parliament intended that claims for the recovery of costs and expenses incurred in executing works, or taking other steps, were to be the subject of mandatory arbitration, and were not court litigation. That purpose is clear, and it is express. A claim brought under s. 82 (1) (b) is, on its face at least, just such a claim. Unless it has been excluded, it would fit squarely within the first part of s. 96 (3), and would presumably be the subject of the purpose expressly identified in the first part of s. 96 (3), which is that such claims should be subject to arbitration, and not litigation. Mr Croall observes that claims under s. 82 (1) (b) are likely to be one of the largest categories of claims covered by s. 96 (3). He submits that it might be thought to be surprising if Parliament had chosen expressly to exclude one of the largest categories of such claims from the policy it had so clearly articulated; and that if it was going to do so, then Parliament would have been likely to have done so in the clearest possible language. He points to Mr Liddell’s failure to offer any explanation as to why it is that Parliament should have chosen to exclude almost certainly the largest group of such claims from what is otherwise a clearly expressed statutory intention and purpose. Aside from the ‘carve-out’, the irresistible conclusion is that a claim under s. 82 (1) (b) would firmly lie within s. 96 (3), and therefore be subject to statutory arbitration In the end, the issue for the court is whether the language used in the ‘carve-out’ is sufficiently clear to exclude claims that would otherwise be natural candidates to be within s. 96 (3), and therefore subject to mandatory statutory arbitration.[105]Mr Croall submits that the symmetry between ss 96 (1) and 96 (3) in their structure and scheme is striking. S. 96 (1) permits the recovery of relevant administrative costs (including general staff costs and overheads). It bears such a close resemblance to s. 96 (3) that, in the ordinary course, one would expect the sort of claims that fall within s. 96 (3) to be those where one could claim administrative expenses under s. 96 (1). Effectively, they are the same animal: claims for costs or expenses by a person by reason of a provision in Part III of the 1991 Act. It is common ground that CityFibre can claim administrative expenses under s. 96 (1). This indicates that this kind of claim falls within s. 96 (3). Thus, the structure of s. 96 itself supports the way in which CityFibre contends that s. 96 (3) should be construed.[106]Mr Croall submits that a careful analysis of the core provisions of ss 82 (1) and 96 (3) leads to the conclusion that s. 82 (1) (b) claims are exactly the type of claims one would expect to fall within the first part of s. 96 (3), and hence be subject to mandatory statutory arbitration. That is so as a matter of the true construction of the language used, as a matter of the scheme of the statutory provisions, and as a matter of policy. That is important because it provides the context in which one has to read and construe the ‘carve-out’. This does not stand on its own, but must be read in that context.[107]Mr Croall invites the court to reflect upon the three instances of exclusion from the otherwise general scheme of mandatory statutory arbitration provided for by s. 96 (3). The first concerns disputes relating to the charging of a fee. These would not fall within the opening words of s. 96 (3), referring to the recovery of costs or expenses incurred, and so this exception is provided merely by way of clarification. The legislature has seen fit expressly to spell out that the charging of a fee is not the recovery of a cost or expense incurred in executing works or taking other steps. Passing over the disputed part of the ‘carve-out’, to s. 78, which is the expressly excluded claim. That is to do with contributions to the cost of making good long-term damage to the street. These are outwith the scope of the first part of s. 96 (3), and so are not within the requirement for mandatory statutory arbitration. Mr Croall submits that it is perfectly easy to see why these two heads of claim do not fall within s. 96 (3). They do not purport to be claims for the recovery of costs or expenses incurred in executing works or taking other steps. They are something quite different. But, out of an abundance of caution, Parliament wished to make it clear that these are not the subject of mandatory arbitration. So the other two excluded items do not in any way undermine the overall policy that is expressed in the first sentence of section 96(3). That is the policy of requiring claims for the recovery of costs and expenses to be the subject of mandatory arbitration. They simply spell out that these different types of potential claims and disputes are not the subject of compulsory arbitration.[108]That brings the court to the words which are in dispute on this claim:
“conferring a right to compensation”
. The real issue for the court is whether those words have sufficient clarity that they are effective to exclude a claim that would otherwise fit squarely within the first sentence of s. 96 (3), despite the fact that by so doing one would be excluding a large portion of such claims, and thereby undermining the purpose of such provisions. Mr Croall contends that the words ‘right to compensation’ simply do not have the required clarity to achieve that effect. Where the Parliamentary draftsperson intends to exclude a particular head of claim arising under a particular section they identify the section. They do that in s. 96 (3) with s. 78. That was the technique used in the 1950 Act to exclude s. 26 claims. Parliament has not used sufficiently specific language to identify claims under s. 82 (1) (b) or, for that matter, s. 82 (1) (a), as falling within the ‘carve-out’. Instead, they have used the more general language of “a right to compensation”, in circumstances where in Part III of the 1991 Act, the word ‘compensation’ has not been used anywhere. ‘Compensate’ yes, but ‘compensation’ no.[109]CityFibre contends that it is all the more difficult for those general words to have the effect for which Cadent contends in circumstances where, on any sensible construction of s. 82 (1) (b), the claim, as the Court of Appeal made clear, is one giving rise to a right of recovery for the undertaker whose apparatus is damaged. The second sentence of s. 96 (3) opens with words of inclusion. If a provision confers a right to recover, then that is squarely within the first sentence of s. 96(3). Mr Croall submits that s. 82 (1) (b), properly construed, gives rise to a right to recover expenses incurred in making good damage to apparatus. If, on its true construction, s. 82 (1) (b) confers a right to recover those costs, it is very hard to see how it can be both included and excluded from s. 96 (3) in the very same sentence. It is in part to meet this point that Mr Liddell invests a great deal in the phrase ‘expressed as …’. His answer to Mr Croall’s point is to say that Parliament has been very careful in its use of language, and that ‘compensation’ is what the provision is ‘expressed as’ conferring. That, he says, is where you find your answer. Mr Croall points out that things are ‘expressed’ in all sorts of different ways. That is what statutory interpretation is all about. The substantive effect of the language of s. 82 (1) (b) is to confer a right to ‘recover’. It is ‘expressed’ as such.[110]CityFibre says that if one looks at s. 82 (1) (b) again, the overall structure operates in such a way that an undertaker who incurs costs in making good damage to apparatus caused by another undertaker working in the street is provided with a right to ‘recover’ such costs. The only circumstances in which they are not entitled to such a right of recovery are to be found in sub-section (4). That is because it is a strict liability provision. Mr Croall submits that Mr Liddell's emphasis upon the phrase "expressed as" does not help him. It does not provide the court with any kind of decisive pointer. CityFibre says that on its true construction, a claim under s. 82 (1) (b) does provide an undertaker, in the circumstances there defined, with a right of recovery. That being so, in the second sentence of section 96 (3), Parliament has made it clear that any claim under s. 82 (1) (b) is subject to statutory arbitration. Having done that, the legislature cannot possibly be saying, in the words that follow, that a right to compensation is excluded from mandatory arbitration. That conclusion is consistent with the language of s. 96 (3), and also the structure of ss 96 (1) and (3), which mirror each other.[111]Mr Croall recognises that this begs the question what does a "right to compensation” mean if it does not include a claim under s. 82 (1) (b)? Both parties are at one in the sense that they have identified where the word ‘compensate’ - not ‘compensation’ but ‘compensate’ - is used elsewhere in Part III of the 1991 Act. Mr Croall submits that where the word ‘compensate’ is used in ss 79 (4) (b) and 84 (4) – and, indeed, in s. 82 (1) (a) – it is being used in the sense of ‘recovery’ in respect of any loss or damage incurred. Such claims are excluded from mandatory arbitration by the ‘carve-out’ in s. 96 (3). By contrast, s. 82 (1) (b) is concerned with the recovery of any expense reasonably incurred in making good damage to street apparatus. It is a different type of liability to compensate: one that necessarily, and of its very nature, falls within the early parts of s. 96 (3), and not the ‘carve-out’, and so is subject to mandatory statutory arbitration.[112]Mr Croall submits that the problem that faces Cadent on this claim is that it has to invest literally everything in the one word ‘compensate’. It almost has to invite the court to shut its eyes to the context in which it is being used, to the substance of what follows it, and, for that matter, to the very purpose of the provision at s. 96 (3). What Cadent has to say is that because the word ‘compensate’ has been used, for reasons it cannot explain, and which are inconsistent with the apparent purpose of the statute, Parliament must have intended to exclude this type of claim from the mandatory requirement for statutory arbitration. This is despite the fact that it is hard to put one’s finger on the reason why Parliament should have wanted to do that; and even though Cadent’s own materials in relation to the 1950 Act provide a hint that Parliament might not have intended to do that if one looks at their substance, rather than simply whether to the word ‘compensate’ has been used.[113]Mr Croall submits that almost all of the provisions which Mr Liddell would be bound to accept are subject to mandatory arbitration are just as capable of being characterised as conferring a right to compensation as s. 82 (1) (b). If what Parliament has done under s. 82 (1) (b) is to confer a right to compensation because the owner of damaged street apparatus has the right to recover expenses incurred, surely the same would apply to every other provision where there is a right to recover expenses which have been incurred. That would be just as much a right to compensation as the provision at s. 82 (1) (b). The problem with this is that it leaves literally no claims falling within the arbitration provision. On Cadent's construction, they would all fall outside it because they would all confer a right to compensation. As a matter of substance, rather than form, there is really no difference between any of them and a claim under s. 82 (1) (b). Obviously that cannot be right because it would involve denuding the first part of s. 96 (3) of any purpose at all. Taking the matter in the round, and looking at the language and purpose of s. 96 (3), Mr Croall submits that, as a matter of construction, this is a case where there is a clear answer: claims under s. 82 (1) (b) fall squarely within the first sentence of s. 96 (3). They are not excluded by the language upon which Cadent relies, namely “expressed as … conferring a right to compensation". Such a result is the happy consequence both of removing otherwise difficult inconsistencies within s. 96 (3), and also of avoiding undermining the apparent purpose of the first part of that sub-section.[114]At the end of his oral submissions, I invited clarification from Mr Croall about one point: the appropriate venue for determining claims for compensation under s. 82 (1) (a). He confirmed that his submission is that such claims are not arbitrable because they do not fall within the scope of s. 96 (3) at all. That is because they do not involve any claim to ‘recover’ costs or expenses incurred. Therefore s. 96 (3) has no application to any claim under s. 82 (1) (a).[115]Mr Croall proceeded to address the reliance that Cadent places upon:(1) the provisions of the 1950 Act,(2) the extracts from the statutory guidance issued in relation to the 1991 Act, and(3) the three case law authorities that Cadent claims are consistent with its position. He began this part of his submissions by reminding the court of the passage from Lord Hodge's judgment (at paragraph 30 of R (PRCBC) v Home Secretary) where he made it clear that secondary materials are just that. They cannot displace the clear meaning of language when read in context, and taking account of the true purpose of the statute. That is said to be a legitimate, and appropriate, starting point when considering the secondary materials. As Lord Hodge observed: External aids to interpretation therefore must play a secondary role … But none of these external aids displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity. (1) The provisions of the Public Utilities Street Works Act 1950[116]Cadent submits that the provisions of the 1950 Act, which previously covered similar ground, form a legitimate, and probative, aid to the true construction of the 1991 Act. Specifically, Cadent invites the court to prefer its proposed construction because s. 31 (2) of the 1950 Act (which was repealed and replaced by the 1991 Act) provided that claims by owning undertakers against operating undertakers to recover the cost of making good damage were expressly excluded from the scope of statutory arbitration. Essentially Cadent invites the court to conclude that because a provision of the 1950 Act had an express exception of a particular kind, Parliament must have intended the same exception to be included within the 1991 Act, despite the fact the relevant provision does not use the same language, or adopt the same formula.[117]Mr Croall’s response is that it is an illegitimate starting point to assume that what Parliament intended to do was to enact precisely the same statutory regime as existed under the 1950 Act, despite the fact that it saw fit to repeal that existing regime and put a new one in its place. He urges the court to decline Cadent’s invitation. When construing s. 96 (3) of the 1991 Act, it is not legitimate to assume that Parliament intended to re-enact precisely the same regime that had existed under the previous statute. This is because:(1) With the exception of a consolidating statute, there is no logical reason to assume that when Parliament enacts a new statute to replace old legislation covering the same subject-matter, its intention was to retain some, or any part, of the old regime which is being repealed. If anything, the starting point should be that Parliament intended, or at least might have intended, to change the previous position; otherwise why repeal the earlier statute? Mr Croall reminds the court of the observation of Lord Bingham at paragraph 8 of R (Quintavalle) v Secretary of State for Health (previously cited) to the effect that normally every statute is enacted to make some change, and not to keep matters the same. He also reiterates the comment at paragraph 24.5 of Bennion that: “At its most basic level, the purpose of an Act is normally to make changes in the law.”(2) Cadent has cited no authority or any practitioners’ text to justify its submission. The authority cited is the passage at paragraph 30 of R (PRCBC) v Home Secretary. This identifies a number of possible materials which may cast light on the meaning and purpose of a statutory provision. Conspicuous by its absence from those examples, however, is the text of the statute which is being repealed. Moreover, the same passage emphasises the secondary role of external secondary aids; and makes it clear that such aids do not displace the meaning conveyed by the words of a statute when these are clear and unambiguous, and are not productive of any absurdity.(3) The extract from paragraph 24.1 (2) of Bennion cited by Mr Liddell does not suggest that the terms of the statute which is being repealed are relevant as an aid to the construction of the repealing statute. As Bennion explains, judicial decisions on previous statutory provisions may be of relevance when the same language or expression is used in successive statutes. But this principle has no application here. It is true that sometimes courts have regard to the legislative evolution of a statutory provision. But, as Bennion makes clear (at paragraph 24.5), at its most basic level, the purpose of a new statute is normally to change the law, so that any consideration of legislative history is usually undertaken to assist in identifying the extent and purpose of any change.(4) Cadent’s submission is further weakened by three additional considerations. The first is the fact that s. 96 (3) of the 1996 Act does not use materially identical language to s. 31 (2) of the 1950 Act, or take the same form. In contrast to the mechanism adopted in s. 96 (3) of the 1991 Act, the proviso to s. 31 (2) of the 1950 Act specifically excluded particular classes of claim from the scope of mandatory arbitration by reference to the particular section under which such claims would be brought. The use of different language, and a different structure, contradict the suggestion Parliament intended to retain the regime of the 1950 Act. The second is that there is no equivalence between the provisions of s. 26 (6) of the 1950 Act and s. 82 (1) of the 1991 Act and their relevant compensation regimes. The former does not have the same ring of strict liability as the latter; and the grounds of liability are not precisely the same. The third is the fact that paragraphs 28.17-27 of the Horne Report recommended that arbitration should be more readily available, and that claims for the reimbursement of monies resulting from damage to an undertaker’s apparatus should be subject to arbitration.[118]Mr Croall submits that the starting point for Cadent’s submission founded upon the terms of s. 31 of the 1950 Act is misconceived. The matters relied upon do not inform the interpretation of ss 82 (1) (b) and 96 (3) of the 1996 Act. In any event, the language of those new sections is both clear and unambiguous. S. 96 (3) makes it clear that wherever under any provision of Part III “a person is entitled in certain circumstances to recover costs or expenses incurred by him in executing works or taking other steps, any dispute as to the existence of those circumstances or as to the amount recoverable shall be determined by arbitration.” Finally, insofar as it may be relevant, any external assistance afforded by the Horne Report suggests that any change from the regime provided for by s. 31 of the 1950 Act is likely to have been intentional.[119]In summary, Mr Croall submits that when one looks at the 1950 Act and its structure, all one can take away from it, with any degree of confidence, is that it was being repealed and changed. That is an entirely orthodox conclusion to draw. All that Mr Liddell really relies upon is what he describes as the state of the law that existed at the time the 1991 Act was put in place, and which was being repealed and removed. That is simply not a legitimate exercise. That conclusion is underscored by passages in the Horne Report. The authors of this report made it clear that they did not follow the logic for excluding claims under s. 26 from the mandatory arbitration provisions. They were positively recommending that arbitration should apply to claims of the type with which we are presently concerned. They go on, in paragraph 28.27, to express a more general view that “arbitration should be readily available when needed”. There is nothing in the Report to suggest that any dispute should be determined in court, or should be litigated. The debate was about the availability of arbitration; and the authors were suggesting that any renewed version of the street works legislation should allow for the possibility of arbitration of claims by one undertaker against another for damage caused to their street apparatus. There is no reason to suppose that the Government’s acceptance of the one specific recommendation at the end of paragraph 28.27 entailed the rejection of its underlying reasoning. Mr Croall doubts whether much reliance can be placed upon the secondary materials at all. If anything, they tend to support CityFibre’s position rather than Cadent's. (2) Extracts from statutory guidance issued in respect of the 1991 Act[120]In his skeleton argument Mr Liddell had also placed reliance upon the Code. When he came to address the court, Mr Croall rightly recognised that during his oral submissions, Mr Liddell had indicated that he could place little reliance upon the Code, and that it would not provide much assistance to the court. Mr Croall emphasises that much of the Code is of no conceivable relevance to the issue before this court. Cadent draws attention to Chapter 13 (on ‘Dispute Resolution’), and particularly to paragraph 13.4 (headed ‘Arbitration’). Its significance is said to lie in the fact that the sections of the 1991 Act it identifies as ones where disputes may be settled by arbitration does not expressly include s. 82 (1) (b). However, the list does include (as the last bullet-point) claims for the “recovery of costs or expenses”; and it expressly references s. 96 (3) as the source provision for this. This would potentially include claims under ss 82 (1) (a) and (b). The list at paragraph 13.4 simply identifies every section of the 1991 Act where types of disputes are expressly made subject to arbitration under s. 99. It is not intended to be an exhaustive list of every claim that could be brought under a statutory provision in the 1991 Act which is subject to arbitration. A number of the types of claim which are subject to arbitration are not expressly identified in the list apart from falling within s. 96 (3). That sub-section affords the statutory basis for allowing claims under a whole series of other sub-sections, potentially including ss 82 (1) (a) and (b). Nothing in the Code really assists the court on the issue which is before it. If the Code is of any assistance at all, Mr Croall submits that this lies in underlining the proposition that claims for the recovery of costs and expenses arising under Part III are subject to arbitration. The case law authorities[121]Mr Croall emphasises that Cadent places only limited reliance upon the case law authorities. It does no more than suggest that these decisions are consistent with its case, and therefore tend to support it. Cadent does not suggest that any of these authorities actually decide the issue before this court, and nor could it do so. The issue that is before this court did not arise in any of these cases, and no relevant argument was addressed to the court hearing them. In fact, Mr Croall submits that these authorities do not assist Cadent at all.[122]British Telecommunications v Bell Cable Media was exclusively concerned with the quantum of a number of claims brought under s. 82 (1) (b). The court did not consider s. 96 (3) at all. Although the judge did note (at paragraph 4.5) that the recovery available to a party under s. 82 (1) (b) is “apparently limited to expenses reasonably incurred in making good the physical damage to its apparatus”, the decision does not support Cadent’s construction. Insofar as it is relevant at all, it supports CityFibre’s construction of s. 82 (1) (b), and hence the submission that such a claim falls squarely within the first part of s. 96 (3). The fact that the parties agreed to proceed in court to establish the principles for calculating claims establishes nothing.[123]Road Management Services v London Power Networks was concerned with the cost sharing provisions to be found in s. 85 of the 1991 Act, and with whether the defendant was entitled to a stay of the proceedings pursuant to s. 9 of the Arbitration Act 1996 on the basis that such claims fell within the arbitration provisions of (amongst others) the 1991 Act. Consideration was given to s. 96 (3). The judge held (at paragraph 38) that s. 96 (3) is only concerned with the arbitration of disputes about the various obligations to pay money for which provision is made in the various sections of Part III of the 1991 Act. That conclusion is said to be perfectly consistent with CityFibre’s case. It is true that, when reciting the submissions of leading counsel for the claimant, Forbes J identified a number of what were submitted to be examples of obligations to pay money under Part III to which s. 96 (3) would apply. It is also correct that this non-exhaustive list did not include s. 82 (1) (b). However, this is of no significance given that the judge was not considering s. 82 at all. This passage does not mean that claims under s. 82 (1) (b) do not afford another such example; and, in any event, these comments formed no part of the judge’s reasoning, which is contained at paragraph 38.[124]Southern Gas Networks v Thames Water Utilities is a decision about statutory compensation payments where the supply of gas is interrupted. One issue was whether payments made by the claimant to customers were recoverable from the defendant under s. 82 (1) (b). The court (in this context) considered s. 82 (1) and (at paragraph 20) noted that claims under s. 82 (1) (b) are limited to the recovery of the costs of making good damage to apparatus. This observation is consistent with CityFibre’s case. The issues in that case were in no sense identical to the issue that falls for decision in the present case.[125]Mr Croall submits that the significance of Buxton LJ’s observations in the Yorkshire Electricity case is that he was clearly of the view that cases such as the present should not be cluttering up the court system. That is consistent with the clear policy and purpose underlying the first part of s. 96 (3).[126]Mr Croall submits that none of these decisions bears directly on the issue before this court. However, the observations made in each of these decisions are consistent with CityFibre’s arguments on this claim. At its lowest, these cases do not assist Cadent. Moreover, unlike Cadent’s construction, these decisions do not undermine the essential regime and purpose made clear in s. 96 (3) in relation to claims for the recovery of expenses and costs incurred in carrying out works or other steps.[127]At the end of his oral submissions, Mr Croall pointed out that it was highly unlikely that the automatic reference to arbitration which applied in 1991 would have had much impact on a claim such as the present, or on cases like it, because it operated at a lower financial level than claims which typically fall under the 1991 Act. Mr Croall emphasised that limitations on recoverable costs in cases on the small claims track operate as a disincentive to settlement. They encourage defendants to allow litigation to run on without the risk that they will be penalised in costs at the end of the case, save in exceptional circumstances. They do not promote settlement from a paying party, who has no interest in paying early. However, the real substance of CityFibre’s case on why the policy embodied in s. 96 (3) is undermined by forcing these matters through the courts relates principally to the delay caused to such legal proceedings.[128]In the circumstances, Mr Croall invites the court to dismiss this challenge to the arbitral tribunal’s jurisdiction, uphold the partial award, and order Cadent to pay the costs of these proceedings.

Cadent’s reply

[129]Mr Liddell began his reply by reiterating that ss 82 (1) (a) and (b) both confer a right to be compensated by an undertaker. At paragraph 4.5 of his judgment in British Telecommunications v Bell Cable Media, Judge McGonigal used the phrase ‘compensation payable’ in relation to claims under both limbs of s. 82 (1). There is no good or legitimate reason to characterise s. 82 (1) (b) as conferring a right to recover costs or expenses, particularly in circumstances where the draftsperson has specifically used the phrase ‘shall compensate’ in relation to both s. 82 (1) (a) and (b). Mr Liddell rejects Mr Croall’s submission that Mr Liddell’s emphasis on the words in s. 96 (3) "expressed as … conferring a right to compensation" do not provide any decisive pointer for the court. Indeed, the opposite is the case. This is illustrated by the words used in other relevant provisions of Part III of the 1991 Act (as summarised at appendix 1 to Cadent’s skeleton argument), variously characterising different entitlements in terms of rights of ‘recovery’, ‘reimbursement’, ‘indemnity’, and ‘compensation’. Mr Liddell submits that these various provisions are expressed intentionally in these different ways. The draftsperson appreciated this when drafting s. 96 (3) and, in the ‘carve-out’ deliberately distinguished anything which is expressed as conferring a right to ‘compensation’ from those other cases which are expressed as conferring a right ‘to recover’ or imposing a liability ‘to reimburse’ or ‘to indemnify’, or ‘to bear the cost’. CityFibre suggests that the purpose and intent of s. 96 (3) are to be derived from the mandatory arbitration provided for in its first sentence. But one cannot read that in isolation. It has to be read with the linked provision, which is the ‘carve-out’.[130]Mr Liddell points out that we have no evidence about the comparative number of disputes in relation to s 82 (1) (b) and other types of claim under Part III of the 1991 Act. In any event, the number of cases that are proceeding through the courts cannot override the wording of the statute, and does not supply the answer as to how the provision should properly be construed. Mr Liddell submits that the upshot of CityFibre’s position is that what is being carved out of the requirement for mandatory arbitration are essentially any provisions providing a right to compensation which do not necessarily relate to the recovery of costs or expenses incurred in executing works. He points out that, subject to the ‘carve-out’, mandatory arbitration extends to the recovery of costs and expenses incurred in “taking other steps” as well as “in executing works”. Mr Liddell also points out that compensation under s. 82 (1) (a) may well relate to expenses incurred by the street or other relevant authority in respect of any damage or loss caused to their apparatus or other items of their property.[131]Mr Liddell submits that the upshot of CityFibre's case on the meaning of the ‘carve-out’ from mandatory arbitration in relation to any provision expressed as “conferring a right to compensation” appears to be that this would extend to any provision which does not provide a right to recover costs or expenses incurred in making good damage to apparatus. Mr Liddell objects that if that were the case, the wording would have been very much clearer. Indeed no ‘carve-out’ would be needed if s. 96 (3) simply deals with the recovery of costs and expenses. Mr Liddell submits that the reality is that this is an attempt by CityFibre to try to explain away the phrase ‘right to compensation’. It involves a strained and erroneous interpretation. The natural and true construction of the words “expressed as … conferring a right to compensation” is that they extend to those provisions which express a right to compensation, which includes both s 82 (1) (a) and (b); and no distinction should be drawn between them.[132]At the end of his reply, in answer to questions from the bench, Mr Liddell confirmed that his submission is that s. 96 (3) would, in principle, extend to claims under s. 82 (1) (a) as well as s. 82 (1) (b). But since s. 82 (1), in both its limbs, is “expressed as … conferring a right to compensation”, claims under both limbs fall within the ‘carve-out’ from the requirement for mandatory statutory arbitration.[133]Those were the parties’ submissions. Analysis and conclusions 134. Preliminary

Analysis and conclusions

[134]I began the hearing of this arbitration claim by raising two matters with counsel. The first was whether, given the wider issues of public interest and importance raised by this challenge to the arbitral tribunal’s jurisdiction, it would be appropriate for me to give permission to appeal under s. 67 (4) of the 1996 Act whatever the outcome of the present hearing. That is because of the number of other cases, both ongoing and prospective, that will potentially be affected by my decision on this claim. The second concerned the form of this judgment. Since this hearing was taking place in open court (albeit remotely, via the Teams video platform), and no issues of commercial confidentiality were engaged, I indicated that I considered it appropriate for the names of the parties to feature in my reserved judgment. I received no objection to either course of action.[135]It is appropriate to begin this crucial section of my judgment by clearing the decks of a few red herrings that were landed there. These comprise: external aids; the case law authorities; the bifurcation issue; and matters of policy. External aids[136]I derive no assistance in the interpretation of s. 96 (3) of the 1991 Act from the external aids identified by Cadent. My reasons are twofold. First, I accept Mr Croall’s submission that external aids, as secondary materials, are just that. They cannot displace the clear meaning of the statutory language, when read in context, and taking account of the true purposes of the statute. For reasons that will become apparent, I regard the language of s. 96 (3) as clear. Second, I am satisfied that the external aids on which Mr Liddell relies provide no clear assistance as to the true meaning and effect of s. 96 (3).[137]The first of Mr Liddell’s external aids is the state of the law before the enactment of the 1991 Act. Mr Liddell submits that the existing exception (in s. 31 (2) of the 1950 Act) from the scope of mandatory statutory arbitration that applied to claims for compensation against operating undertakers for making good damage to apparatus caused by street works was carried across from the 1950 Act into the 1991 Act. For the several reasons given by Mr Croall (which I accept), I find that there is no legitimate basis for any assumption that it was Parliament’s intention to re-enact the equivalent statutory dispute resolution regime that had existed prior to the coming into force of the 1991 Act. This was not a consolidating statute. The long title reads:
“An Act to amend the law relating to roads so as to enable new roads to be provided by new means; to make new provision with respect to street works and, in Scotland, road works; and for connected purposes.”
There is no valid reason to assume that Parliament intended, by s. 96 (3) of the 1991 Act, to retain the pre-existing exclusion from the requirement for mandatory statutory arbitration provided by s. 31 (2) of the 1950 Act. That is clear from paragraph 8 of Lord Bingham’s speech in Quintavalle (emphasising that non-consolidating statutes are enacted to make changes in the law) and the introductory comment at paragraph 24.5 of Bennion that:
“At its most basic level, the purpose of an Act is normally to make changes in the law.”
S. 96 (3) of the 1996 Act does not reproduce the same language, or adopt the same drafting style or technique, as s. 31 (2) of the 1950 Act.[138]I find that the relevant paragraphs of the Horne Report provide no clear guidance as to Parliament’s intentions regarding the scope of mandatory statutory arbitration of disputes between street undertakers. At best (from Cadent’s perspective) they are equivocal. If they are of any assistance at all, they tend to support CityFibre’s position by expressing the writers’ hope that arbitration should be readily available when needed, prefaced by the observation (at paragraph 28.26) that “where damage is caused by one utility to the apparatus of another in the normal course of utility works in the street (s. 26), we see no particular reason why these matters should be excluded from settlement by arbitration”. I would agree with Mr Croall’s submission that, insofar as it may be of any relevance at all, any external assistance afforded by the Horne Report suggests that any change from the regime previously provided by s. 31 of the 1950 Act is likely to have been intentional.[139]As Mr Liddell recognised during his oral submissions, the Code provides no assistance on the true interpretation of s. 96 (3). The last bullet-point to paragraph 13.4 expressly lists s. 96 (3), referencing it as the ‘recovery of costs or expenses’. The Code thereby begs the very question this court has to decide. Again, I accept Mr Croall’s submissions on this aspect of the case. The case law authorities[140]I derive no assistance whatsoever from any of the case law authorities that were cited to me concerning the 1991 Act. As is common ground, none of these cases directly raised the issue that falls to be determined in the present litigation. The fact that parties may have been content to proceed by way of litigation in the courts is no reliable indication as to whether or not arbitration of the relevant dispute was mandated by s. 96 (3). Observations concerning the meaning or effect of statutory provisions that do not fall for final and binding adjudication in the underlying litigation are seldom of assistance when the issue does finally arise for authoritative adjudication. That is because judicial observations take their colour from the context in which they arise and are pronounced, and are seldom of any real value unless informed by competent, and reliable, adversarial argument which is actually directed to, and focussed upon, a point that is actually in issue between the parties, and falls for determination by the court. The bifurcation issue[141]I agree with Mr Liddell that, for the reasons he gave (which I accept), the bifurcation issue is not engaged by the present exercise in statutory interpretation. It is another red-herring. Properly construed, a claim for administrative expenses under s. 96 (1) of the 1991 Act forms part of an undertaker’s substantive claim for compensation under s. 82 (1). It is a sub-set of any claim brought under the latter sub-section. Thus there is one composite claim that, if necessary, falls for determination, either by the court or by way of mandatory statutory arbitration, as part and parcel of a one dispute, and a single adjudicative process. There is no scope for different aspects of an undertaker’s claim to fall to be determined by different dispute resolution mechanisms, or in different fora. Depending upon the true scope of s. 96 (3), all will fall to be determined either by the court or by the arbitral tribunal. The reasoning of the highest courts in the Fiona Trust and the Republic of Mozambique cases is not engaged in this litigation. Matters of policy[142]In agreement with the Horne Committee, where damage is caused by one utilities undertaker to the apparatus of another in the normal course of street works, I can see no particular reason why any resulting dispute should be excluded from determination by way of arbitration, leaving it to be litigated in the county court instead. Indeed, I recognise that arbitration offers considerable advantages, particularly in terms of the speed of final resolution, and the recovery of costs from the unsuccessful party. However, I agree with Mr Liddell that policy arguments in favour of arbitration cannot overcome the correct approach to the true interpretation of the scope and ambit of s. 96 (3), in accordance with established principles of statutory interpretation. In any event, it is clear that whatever view is taken of the true meaning and effect of s. 96 (3), there are certain areas of dispute that Parliament has decided should fall outwith the scope of mandatory referral to statutory arbitration. Try as I might, I have been unable to discern any rational justification for distinguishing between different types of dispute, or for leaving some areas of dispute to be resolved through the courts rather than by way of arbitration. Why should disputes involving the charging of a fee, or requiring an undertaker to contribute to the cost of making good long-term damage to the street, or to pay ‘compensation’ (however far this may extend), be excluded from the scope of mandatory referral to arbitration in accordance with s. 99 of the 1991 Act? Of course, I accept that it is the duty of the court to favour an interpretation of legislation which gives effect to its apparent purpose rather than defeating it. But this presents obvious problems of application when the court has difficulty in discerning the apparent purpose of the particular statutory provision which falls to be construed.[143]For these reasons, I do not consider that it is permissible for this court to approach the current exercise in statutory interpretation with a view to favouring, as a matter of policy, arbitration over litigation in the county court (or vice-versa). The true interpretation of ss 82 (1) and 96 (3) of the 1991 Act[144]In my judgment, the appropriate starting-point is s. 82 (1) since this is the enabling provision upon which CityFibre relies to claim its expenses incurred in making good any damage that Cadent may have caused to its apparatus, and which forms the underlying claim referred to the arbitrator. This subsection imposes a liability on an undertaker to compensate for damage or loss caused by its execution of street works or any event of a kind mentioned in s. 82 (2). In this case, the court is concerned with the execution by the undertaker of street works. That liability is owed to two classes of person. The first (by paragraph (a)) is the street or any other relevant authority. Here the liability is “in respect of any damage or loss suffered by the authority in their capacity as such”. The second (within paragraph (b)) is any other person having apparatus in the street. This is narrower in its scope, and extends only to “any expense reasonably incurred in making good damage to that apparatus”.[145]In my judgment, a street, or other relevant, authority that reasonably incurs expense in making good damage to any apparatus it may have in the street is entitled to recover such expense under s. 82 (1) (a) as a head of “damage or loss suffered by the authority in their capacity as such”. If this were not the case, then such expenses would be irrecoverable from the undertaker since compensation under s. 82 (1) (b) is restricted to persons other than the street or any other relevant authority. Given the scheme of the 1991 Act, I cannot accept that Parliament intended that such expenses should fall outside the scope of statutory compensation.[146]It is against that background that I turn to s. 96 (3). This applies where under any provision in Part III of the 1991 Act, a person is entitled, in certain circumstances, “to recover costs or expenses incurred by him in executing works or taking other steps”. In such a case, the first sentence of s. 96 (3) makes it clear that any dispute as to the existence of those circumstances, or as to the amount recoverable, is required to be determined by arbitration (which will fall to be dealt with as provided by s. 99). The second sentence begins with words of inclusion, reinforcing and expanding the scope of the disputes covered by mandatory arbitration:
“This applies whether the provision is expressed as conferring a right to recover, or as imposing a liability to reimburse or indemnify or to bear the cost … ”
. But certain matters are then excluded by the ‘carve-out’, which expressly provides that the requirement for mandatory arbitration “does not apply in relation to a provision expressed as providing for the charging of a fee or conferring a right to compensation or in relation to section 78 (contributions to cost of making good long-term damage to the street)”.[147]I agree with Mr Croall that the determination of this arbitration claim turns upon the true meaning and effect of the ‘carve-out’ for which Parliament has provided at the end of the second sentence of s. 96 (3) of the 1991 Act. Mr Croall emphasises that Cadent’s case turns entirely upon this ‘carve-out’. If it were not there, any claim under s. 82 (1) (b) would clearly fall within the scope of the mandatory submission to arbitration otherwise provided for by s. 96 (3). So I accept Mr Croall’s submission that the real issue for this court is whether the language of the ‘carve-out’ has the effect for which Cadent contends, and takes a claim that would otherwise fall squarely within s. 96 (3) outside its scope.[148]The ‘carve-out’ creates three exceptions to the statutory scheme for the mandatory resolution of disputes over the recovery of costs and expenses under any provision of Part III of the 1991 Act. It is common ground that only one of these three exceptions has any potential application to the present case. That is “a provision expressed as … conferring a right to compensation”.[149]Shorn of all embellishments, Mr Liddell’s key submissions are short, clear, and, in my judgment, compelling. They can be distilled down to the following four propositions:(1) Read literally, the ‘carve-out’ from s. 96 (3) provides for any dispute concerning a provision “expressed as … conferring a right to compensation” to be resolved by litigation rather than arbitration.(2) The opening words of s. 82 (1) "An undertaker shall compensate … " expressly condition both limbs (a) and (b) of that sub-section.(3) Therefore both s. 82 (1) (a) and (b) expressly confer “a right to compensation”.(4) Claims under both limbs (a) and (b) of s. 82 (1) therefore fall squarely within the ‘carve-out’ from s. 96 (3). They are therefore expressly excluded from the mandatory arbitration regime otherwise provided for by that sub-section.[150]I accept Mr Liddell’s submission that all instances of the use of the term ‘compensate’, and its derivatives, in Part III of the 1991 Act, benefit from the ‘carve-out’ from s. 96 (3). The first part of s. 96 (3) provides for disputes concerning the recovery of costs and expenses to be referred to arbitration. That is then reinforced by the opening words of the second part of s. 96 (3). But this is then followed by an exclusion - the ‘carve-out’ - in relation to any provision “expressed as … conferring a right to compensation”. In my judgment, Mr Liddell is right to emphasise Parliament’s use of the phrase ‘expressed as’, which qualifies the words “conferring a right to compensation”. I agree with Mr Liddell that Parliament’s deployment of this phrase would seem to me to be intentional and precise. In terms, it dictates that any provision that is “expressed as” conferring a right to compensation falls within the ‘carve-out’ contained within the proviso to s. 96 (3).[151]Cadent's position is straightforward and, in my judgment, correct. Ss 82 (1) (a) and (b), which are both conditioned by the words "shall compensate", fall squarely within the ‘carve-out’ provision of s. 96 (3). This is because both provisions are “expressed as … conferring a right to compensation” on the injured party. By contrast, CityFibre’s position is that once a claim falls within the first part of s. 96 (3), because it concerns a claim “to recover costs or expenses incurred … in executing works”, one does not need to go on to consider the second part of the sub-section, which must be construed as referring to some other “right to compensation”. If a claim falls within the first part of s. 96 (3), so Mr Croall submits, it cannot fall within the ‘carve-out’ because it cannot fall within both. I do not accept Mr Croall’s submission that a claim cannot fall within both parts of s. 96 (3). The ‘carve-out’ is only needed for a claim that already falls within the first part of s. 96 (3).[152]I agree with Mr Liddell that CityFibre’s case ignores both the language, and the apparent purpose, of the ‘carve-out’. This expressly excludes any provision “expressed as … conferring a right to compensation” from the otherwise mandatory arbitration regime. The ‘carve-out’ clearly operates to exclude provisions, such as the whole of s. 82 (1) , which expressly confer “a right to compensation”.[153]I agree with Mr Liddell that the fundamental objection to CityFibre’s submissions is that they ignore the ‘carve-out’ at the end of the second limb of s. 96 (3), and focus exclusively upon the earlier parts of that sub-section. CityFibre’s interpretation impermissibly analyses the first part of s. 96 (3) in isolation, despite the existence of the ‘carve-out’ provision at the end of the second sentence, and the fact that the language of the sub-section deliberately links the two parts of s. 96 (3) together. Nor does CityFibre’s interpretation explain why the 1991 Act uses the term ‘compensate’ to condition the operation of both limbs (a) and (b) of s. 82 (1).[154]Mr Croall emphasises that Cadent has to invest literally the whole of its submissions in the one word ‘compensate’ (and its derivative ‘compensation’). He submits that Cadent almost has to invite the court to shut its eyes to the context in which those words are being used, to the substance of what follows them, and, for that matter, to the very purpose of s. 96 (3). This involves Cadent advancing the proposition that because the word ‘compensate’ has been used, Parliament must have intended to exclude claims under s. 82 (1) from the scheme of mandatory statutory arbitration. This is despite the fact Cadent does not explain why Parliament should have wished to do this, contrary to the apparent purpose of s. 96 (3).[155]Mr Croall is on firm ground when he submits that, ultimately, the issue for the court is whether the language used in the ‘carve-out’ is sufficiently clear to exclude claims that would otherwise naturally fall within s. 96 (3) so as to become the subject of mandatory statutory arbitration. Unfortunately for Mr Croall, I consider that the language of s. 96 (3), when read with s. 82 (1), clearly points in that direction. In my judgment, Cadent’s submissions pay due deference, and give due weight, to Parliament’s decision to frame part of the ‘carve-out’ by reference to provisions “expressed as … conferring a right to compensation”. In contrast, CityFibre’s submissions do not.[156]Mr Croall seeks to explain what is meant by the phrase “a right to compensation” for the purposes of the ‘carve-out’. Specifically, he poses the question: What does a "right to compensation” mean if it does not include a claim under s. 82 (1) (b)? His suggested answer involves drawing a distinction between, on the one hand, the recovery of costs or expenses reasonably incurred in making good damage to street apparatus, and, on the other, recovery in respect of any damage or loss incurred. The former head of recovery is exemplified by claims under s. 82 (1) (b) whereas the latter head of claim encompasses claims under s. 82 (1) (a). Mr Croall submits that claims under s. 82 (1) (b) fall squarely within s. 96 (3), and are not excluded by the ‘carve-out’, whereas claims under s. 82 (1) (a) are not claims “to recover costs or expenses incurred … in executing works or taking other steps” at all, and so fall outside the scope of s. 96 (3).[157]Mr Croall submits that s. 82 (1) (b) is concerned with the recovery of expenses reasonably incurred in making good damage to street apparatus. That is a very different type of recovery from the liability to ‘compensate’ for any loss or damage suffered as a result of street works or other specified events. Recovery under s. 82 (1) (b) necessarily, and of its very nature, falls within the early parts of s. 96 (3). It is not the subject of the ‘carve-out’, and is therefore subject to mandatory statutory arbitration. I reject these submissions as inconsistent with the clear language and scheme of ss 82 (1) and 96 (3) as I have sought to explain them at the beginning of this section of my judgment. I prefer Mr Liddell’s competing submissions. S. 82 (1) (b) (with s. 82 (1) (a)) is clearly expressed as conferring a right to compensation, and so falls within the ‘carve-out’ from s. 96 (3).[158]The first part of s. 96 (3) provides for disputes concerning the recovery of costs and expenses to be referred to arbitration. This is reinforced by the opening words of the second part of s. 96 (3). But there is then an exclusion, or ‘carve-out’ in relation to any provision “expressed as … conferring a right to compensation”. One such provision is s. 82 (1), in both its limbs. Ss 82 (1) (a) and (b), which are both conditioned by the words "shall compensate", fall squarely within the ‘carve-out’ provision of s. 96 (3), as both provisions are “expressed as … conferring a right to compensation” on the injured party.[159]Mr Croall contends that the expression “a right to compensation” in the ‘carve-out’ from s. 96 (3) cannot be construed as including any right which falls squarely within the first part of that subsection. The relevant language “a right to compensation” is part of a ‘carve-out’ from the general position provided for by the first part of s. 96 (3). It must therefore be construed as a right to compensation other than one which falls within the first part of s. 96 (3), namely a claim to be repaid costs incurred in executing works, such as repairing damage to apparatus in the street. I have difficulty in following this submission. A ‘carve-out’ from a particular dispute resolution regime that applies to particular types of claim is only required in the case of a claim that would otherwise fall within the general description of such claims. That is the whole nature, and purpose, of a ‘carve-out’.[160]I prefer Mr Liddell’s competing submissions. He criticises CityFibre’s submission that once a claim falls within the first part of s. 96 (3), because it concerns a claim “to recover costs or expenses incurred … in executing works”, you do not need to go on to consider the second part of that sub-section, which must be construed as referring to some other right to compensation. In my judgment, the submission that if a claim falls within the first part of s. 96 (3), it cannot fall within the ‘carve-out’, because it cannot fall within both, ignores both the language, and the purpose, of the ‘carve-out’. This expressly excludes from the regime of mandatory statutory arbitration any provision “expressed as … conferring a right to compensation”. The ‘carve-out’ is clearly excluding provisions which are “expressed as … conferring a right to compensation”, as the whole of s. 82 (1) does.[161]For these reasons, I accept Mr Liddell’s primary submissions regarding the true meaning and effect of ss 82 (1) and 96 (3) of the 1991 Act, shorn of their embellishments. I reject Mr Croall’s competing submissions as to the true interpretation of these provisions. Both ss 82 (1) (a) and (b) fall within the statutory ‘carve-out’ from the mandatory requirement for statutory arbitration otherwise provided by s. 96 (3) because they fall firmly within the wording of the ‘carve-out’ at the end of that sub-section.[162]Both Cadent and CityFibre agree that claims for compensation under s. 82 (1) (a) fall outside the mandatory arbitration regime provided for by s. 96 (3). But they do so for different reasons. Mr Liddell’s submission is that s. 96 (3) would in principle extend to claims under s. 82 (1) (a). But since both limbs of s. 82 (1) are expressed as conferring “a right to compensation”, claims under both paragraphs (a) and (b) of s. 82 (1) fall within the ‘carve-out’ from the requirement for mandatory statutory arbitration. Mr Croall submits that claims for compensation under s. 82 (1) (a) are not arbitrable because they do not fall within the scope of s. 96 (3) at all. That is because they do not involve any claim “to recover costs or expenses incurred”. S. 96 (3) therefore has no application to any claim under s. 82 (1) (a).[163]I prefer Mr Liddell’s reasoning and analysis as more consistent with the language and structure of ss 82 (1) and 96 (3), as I have sought to explain them. Indeed, at times, I detected a note of tension, or even inconsistency, in Mr Croall’s submissions concerning s. 82 (1) (a). His primary submission was clearly that claims for compensation under this particular sub-section are not claims “to recover costs or expenses”, and thus fall outside the opening words of s. 96 (3). But at times, when addressing the meaning of ‘compensation’, it seemed to me that Mr Croall was also submitting that a claim under s. 82 (1) (a) is one under a “provision expressed as … conferring a right to compensation”, and therefore falls within the scope of the ‘carve-out’. It may be that I misunderstood Mr Croall, or that his ‘compensation’ and ‘carve-out’ analysis was merely an alternative to, and a fall-back position from, his primary submission. However, none of this affects my reasons for preferring Mr Liddell’s analysis of ss 82 (1) and 96 (3) to that of Mr Croall.

Disposal

[164]For these reasons I will make an order setting aside the relevant paragraphs of Mr Mackinnon’s partial award and declare them to be of no effect on the grounds that the arbitral tribunal had no jurisdiction to determine the present dispute between CityFibre and Cadent. Subject to any submissions from Mr Croall, my provisional view is that I should also vary the costs orders in paragraphs 42 (4) and (5) of the award such that the CityFibre should pay Cadent’s costs of the arbitration proceedings (including the costs of the jurisdiction challenge), which, unless agreed, are to be determined by the arbitral tribunal, and also the tribunal’s own costs. Again subject to any submissions from Mr Croall, my provisional view is that the costs of this arbitration claim should follow the event and be ordered to be paid by CityFibre to Cadent as the successful party.[165]I propose formally to hand down this judgment remotely at 10.00 am on Wednesday 16 April 2025. No attendance is required. I invite the parties to seek to agree a substantive order to give effect to this judgment. This should include provision for the costs of this claim, and also the grant of permission to appeal to the Court of Appeal. If the parties cannot agree upon a suitable form of order, they should provide a draft composite order, together with brief written submissions on any outstanding consequential matters (including costs). These should be no longer than strictly necessary, and, in any event, no more than five pages in length. Bearing in mind the forthcoming Easter Vacation, they should be submitted within 14 days after the formal hand-down of the court’s judgment (i.e. by 4.00 pm on Wednesday 30 April 2025). Unless I direct otherwise, I will proceed to determine any outstanding matters on paper, in furtherance of the overriding objective of saving costs, avoiding unnecessary delay, dealing with the matter proportionately, and having due regard to the efficient and effective use of the court’s scarce resources.[166]That concludes this reserved judgment.