Southern Electricity Power Distribution PLC v OCU Modus Limited [2025] EWHC 723 (TCC)

[2025] EWHC 723 (TCC)Case No HT-2022-000090IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTSTECHNOLOGY AND CONSTRUCTION COURTS (KBD)Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27 March 2025
Before
MR JUSTICE CONSTABLE
Between
SOUTHERN ELECTRICITY POWER DISTRIBUTION PLCClaimantOCU MODUS LIMITEDDefendant
Louis Zvesper (instructed by Cameron Mckenna Nabarro Olswang LLP) for ClaimantMichael Smith (instructed by HA Law Solicitors) for DefendantHearing Hearing dates: 4, 5, 6 and 20 March 2025
JUDGMENTThis judgment was handed down by the Judge remotely by circulation to the parties'representatives by email and release to The National Archives. The date and time for
[1]The Claimant, Southern Electric Power Distribution PLC (“SEPD”) brings a claim against the Defendant, OCU Modus Limited, formerly known as Modus Utilities Limited (‘Modus’), for the cost of replacing two 7.2km 33kV ducted underground cable circuits connecting a photovoltaic solar (‘PV’) farm at Wroughton Airfield to SEPD’s existing substation. SEPD alleges that the works were carried out defectively, and claims the cost of interim repairs (£188,909.96, which is not disputed) together with the cost of the entire replacement of the two circuits, via a methodology which involved maintaining the use of the existing circuits during the course of the replacement works along a different route to the original. Modus disputes the nature and extent of the defects, and contend that either no further remedial works were required over and above the interim repairs, or that any such remedial works should have been limited to the replacement of some or all of the joints. In submissions on behalf of Modus, Mr Smith, counsel for Modus, encapsulates the central issue colloquially as whether SEPD should be compensated for implementing a Rolls Royce solution to a Ford Escort problem.[2]During the progression of the case to trial, Modus failed to comply with numerous orders. On 31 January 2025, relief from sanctions was refused by Waksman J. Modus therefore called no factual or expert evidence. During the trial Mr Smith cross-examined within the confines allowed in circumstances where a party has no positive case supported by evidence. Although on the pleadings, an issue had been raised as to whether the contract upon which SEPD relies had been procured by duress (not, on any view, duress by SEPD, it should be noted), this point fell away. The only issues, therefore, upon which there remained a live dispute were the extent of defects and the reasonableness of the remedial solution adopted by SEPD. Modus accepted that if the costs of complete replacement by the methodology in fact adopted are recoverable in principle, the value of the claim is £2,642,237.71, made up of the cost of the interim repairs and £2,453,327.75 for the permanent repairs.[3]The Court heard from Mr Aaron Phillipps, a Connections Manager in the Major Connections Team for Scottish and Southern Electricity Networks (‘SSEN’), which is a trading name of Scottish and Southern Energy Power Distribution Networks, of which SEPD is a part; and Mr Stuart Dickson, also of SSEN. For consistency, I generally use the term ‘SEPD’ below where, in the witness evidence or documentation, ‘SSEN’ or ‘SSE’ was sometimes used, in circumstances where neither side sought to identify any meaningful distinction in the context of this case. Much of the factual chronology set out below is taken from the evidence of Mr Phillipps and Mr Dickson, in respect of which large parts were unchallenged. I formed the clear view that both witnesses were demonstrably honest and sought to assist the Court, giving answers irrespective of whether their evidence particularly supported SEPD’s case or otherwise. The Court also heard from Mr Mamoon Alyah, the engineering expert called on behalf of SEPD. I deal with his evidence at Section E below. B. The Adoption Agreement[4]The agreement pursuant to which the contractual claim is made was called the ‘Adoption Agreement’. Dated 13 February 2016, the Adoption Agreement provided for the “design, supply, installation, commissioning and adoption of the electricity and distribution equipment” at the Site by Modus.[5]Clause 2 provided that:
“In accordance with this Agreement, the Contractor shall carry out and complete the Contestable Works [the works carried out by Modus] and perform all other obligations as are identified in this Agreement to be performed on its part.”
[6]Clause 16 similarly provided that:
“16. The Contractor shall construct and install the Contestable Works in accordance with this Agreement, the Schedules and Appendices.”
[7]Clause 5 required compliance with the requirements of a number of schedules. It is not in dispute that the schedules incorporated ‘Company appendices’, which in turn included ‘Instructions’ issued by SEPD as to the way in which the works were to be carried out. Compliance with good industry practice was also required. It is by reference to noncompliance with these Instructions and/or good industry practice that SEPD advances a number of criticisms of Modus’ work. It is not necessary for me to set out in full detail all Instructions pleaded by the Claimant within its Particulars of Claim. Of particular relevance, however, is an Instruction which required the sheath testing of the Works to meet the minimum specification of 100MΩ at 5kV. In circumstances described more fully below, this was relaxed to a minimum of 10MΩ at 5kV.[8]As to the correction of Defects, Clause 52 provided:
“The Contractor shall bear all reasonable costs incurred by the Company in fault repair or rectification of other defects associated with Adopted Contestable Works during the Defects Correction Period unless such faults are caused by the Company.”
[9]The “Defects Correction Period” is defined in Clause 1 of Schedule A (General Conditions) to mean:
“the period of two years after the Adoption in relation to the Contestable Works…”
[10]Clause 53 provided:
“The Contractor shall bear all reasonable costs incurred by the Company in correcting any latent defects associated with Adopted Contestable Works subject to the provisions of the Limitation Act 1980…”
[11]Clause 54 provided:
“the Parties acknowledge that all work on Adopted Contestable Assets may only be performed by the Company and that neither the Contractor nor the Customer may correct any defects after adoption.”
[12]There is no dispute that for contractual recovery pursuant to Clauses 52 or 53, the costs must(a) be incurred and(b) be reasonable. C. The Law[13]The issues of law in this case relate to the interrelated concepts of the appropriate measure of loss, causation, breaking the chain of causation and the duty to mitigate. On the basis of the helpful legal submissions from both Counsel drawing to the Court’s attention a number of well known cases dealing with these concepts, I summarise the position as follows insofar as relevant to the arguments in the present case:(1) the normal position in cases of defective construction work is that the measure of loss is the cost of reinstatement. (Lord Cohen in East Ham Corporation v Bernard Sunley & Sons Ltd [1966] A.C. 406, 434-435, approving text from the Eighth Edition of Hudson’s Building and Engineering Contracts which stated: 'There is no doubt that wherever it is reasonable for the employer to insist upon reinstatement the courts will treat the cost of reinstatement as the measure of damage';(2) this is subject to reinstatement being a proportionate and reasonable course of action. If it is unreasonable to reinstate, the loss does not extend to reinstatement and the loss would generally be the diminution in value. (Ruxley Electronics v Forsyth [1996] AC 344);(3) in assessing what is reasonable the correct approach is an objective one (Scutt v Lomax [2000] 1 WLUK 530 at [50]);(4) it is for the claimant to prove causation, and if he relies upon a decision which he says was reasonable, it is for him to prove its reasonableness (Skandia Property (UK) Ltd v Thames Water Ltd 57 Con LR 65 at 79);(5) the advice of an expert may be a material factor when determining what was a reasonable course of action (Axa Insurance UK Place v Cunningham Lindsey United Kingdom [2007] EWHC 3032 (TCC) at [268], [2007] All ER(D) 290); (Linklaters Business Services v Sir Robert McAlpine Ltd & Or [2010] EWHC 2931 (TCC); [2010] 133 Con LR 211 at [131]);(6) once a course of action is established as reasonable, the starting point for recovery will usually mean the actual costs incurred if work has been done, from which there should be a reason to depart (Hall v Van de Heiden [2010] EWHC 586 (TCC) at [66]);(7) once causation is established, it is for the defendant to allege and prove a break in the chain of causation, for example by establishing a failure to mitigate (Skandia Property (UK) Ltd v Thames Water Ltd 57 Con LR 65 at 79);(8) the claimant has a duty to mitigate loss. That duty is not an exacting one. It is not enough for the wrongdoer to show that it would have been reasonable to take the steps he has proposed: he must show that it was unreasonable of the innocent party not to take them. This is a real distinction. It reflects the fact that if there is more than one reasonable response open to the wronged party, the wrongdoer has no right to determine his choice. It is where, and only where, the wrongdoer can show affirmatively that the other party has acted unreasonably in relation to his duty to mitigate that the defence will succeed (per Sedley LJ in Wilding v British Telecommunications plc [2002] ICR 1079 at [55]);(9) there is no requirement for a party to be satisfied with reinstatement of an article to an inferior quality to that stipulated in the contract merely because it is cheaper for a contract breaker to supply that (Radford v deFroberville [1977] 1 WLR 1262 at 1248H);(10) reasonable costs do not mean the minimum amount which, with hindsight, it could be held would have sufficed (The Board of Governors of Hospital for Sick Children v McLaughlin & Harvey Plc 19 Con LR 95);(11) however, if there are two equally efficacious alternative remedial schemes and one is cheaper than the other, then prima facie the claimant is obliged to put in hand the cheaper of the two schemes (McGlinn v Waltham Contractors Ltd (No 3) [2008] Bus LR 233) Put another way, if the claimant in fact chooses a more expensive option in this scenario, this does not mean that he is acting unreasonably; but the additional cost is regarded as a consequence of the claimant’s choice and not of the defendant’s wrong (Hirtenstein v Hill Dickinson [2014] EWHC 2711 at [127]). D. The Facts[14]Swindon Solar Farm Limited (‘SSF’) was a special purchase vehicle to hold the solar farm, and SSF was initially operated by British Solar Renewables Limited (‘BSR’).[15]SEPD is a DNO that owns and operates electricity distribution infrastructure across the UK. SEPD has a statutory obligation to connect customers for import or export of electricity pursuant to section 16 of the Electricity Act 1989, further to which SEPD and SSF entered a Connection Agreement dated 21st January 2016. The solar farm was to be connected to the network by installing a new DNO switch room at the project site (the ‘PV Substation’) and installing 7km of two 33kV ducted underground cable circuits between the PV Substation and SEPD’s existing DNO substation at Toothill. The two circuits were each made up of three individual cables, so there were six cables overall. Generally, any works taking place outside a DNO’s site boundary fence are called ‘contestable works’ and can be done by a third party contractor registered under the Lloyd’s Register accreditation scheme (called an independent connection provider, or ‘ICP’). Modus is one such ICP.[16]Mr Phillipps’ team’s role was to deliver the connection, and it was involved in the parties reaching the Adoption Agreement, which was entered at or near the conclusion of the design and construction work and testing, so that following successful testing, the circuits became part of SEPD’s network of assets. Mr Dickson was SEPD’s Project Manager for the Works and Mr Phillipps was his line manager, and it was Mr Dickson’s responsibility to arrange for the entering into of the Adoption Agreement.[17]As explained by Mr Phillipps, the key phases of the Works leading up to adoption can be summarised as follows:(i) gaining landowner consent to access the land on the circuit route;(ii) carrying out any ecological or archaeological mitigation that is required as identified in pre-construction surveys;(iii) excavating of cable trenches;(iv) removing of any surplus ground;(v) installing the cable ducts to the correct depth;(vi) installing cable marker boards above the ducts;(vii) final backfilling above the cable marker boards to ground level and remediating at ground level;(viii) pulling the cables through the ducts;(ix) joining cables at joint bays if the manufactured cables are shorter than the required circuit length (as was the case here); and(x) backfilling the joint bays. SEPD had a Cable Supervision Team to witness ICP works, such as the excavations and cable pulling. The Cable Supervision Team would have done ad hoc inspections at various points to check that the Works were to SEPD’s standards. There is no suggestion that at any time during the currency of the works, the Cable Supervision Team identified any issues with the quality of Modus’ works. When the ICP considers the works to be completed, pre-energisation tests will be performed on the circuits. The pre-energisation tests included pressure tests, to ensure the circuit holds the right level of voltage, and a sheath test which looks at the earth sheath pressure testing, and a final sheath test. A sheath is a copper conductor around the main case of the cable, and this test ensures the continuity of sheath conductors which is part of the cable make up and are essential to the safe operation of the cable circuit.[18]In this case, initial pre-energisation tests were carried out by SEPD on 21 March 2016 from their substation at Toothill, which included end to end testing which was successful. The final pre-energisation tests took place on 23 March 2016 and the results appeared successful. SEPD energised the works the same day and the circuits became part of SEPD’s assets. The completion certificate was signed by Mr Dickson on 4 April 2016. Mr Dickson explained his understanding about the time pressure which existed to have energised the circuit by 31 March 2016. By reason of the conditions for the PV farm receiving a tariff from Ofgem, the Works had to complete load (i.e. electricity generation) commissioning by 31 March 2016.[19]After the cables had been energised, Mr Phillipps received a call to say that one of the circuits had faulted (meaning that it had fully discharged, or that the circuit breaker had tripped indicating a failure of a cable or a piece of apparatus) and that one of SEPD’s Regional Faults Teams was trying to identify the location of the fault. Mr Dickson recalled that this was over the bank holiday Easter 2016 weekend and that he was contacted on Easter Sunday. The fault was 10 or 15 metres from the new PV substation. All six cables had sheath repairs on them in the same place. Cable sheaths include an outer-sheath of PVC and a wire mesh layer underneath that is usually earthed. The outer-sheath can get damaged, so a sheath repair is a rubber sheath that is heat-shrunk around the damage to prevent moisture getting into the cable. When SEPD’s team opened the repairs up, it found that a section of the mesh sheath had been removed on all six cables. This meant that the pre-energisation tests carried out from the PV farm substation only tested the first 10 or 15 metres of each cable from the substation to the point where the mesh had been removed.[20]Mr Phillipps described how, at this time, there was a meeting between him and Modus’s senior management at the SEPD office in Forbury. Modus denied that they had carried out the sheath removals. They believed a third party had accessed the site and carried out those activities overnight without their consent. Modus does not dispute its contractual liability in respect of these defects pursuant to the Adoption Agreement. It does dispute, however, that an inference can or should be drawn from the fact of these removals (which appear to have been carried out deliberately in order to accelerate successful pre-energisation testing by the required deadline) and Modus’ own quality of work or approach to its obligations. I accept, in the context of the issues I have to decide, that SEPD has not established on the balance of probabilities that the sheath removals were carried out by Modus’ operatives, rather than, as Modus said contemporaneously, an unknown third party in circumstances which were not authorised by them. It is not said by SEDP that the need to repair these unauthorised works on the cables itself justified, or indeed was relevant to, the eventual decision to replace the entire cable.[21]SEPD performed an emergency repair to the areas where the sheaths had been removed in order to reconnect the circuits. Due to the proximity to the PV Substation, it was agreed that cables would be pulled from the PV Substation to the joint so that there was only a single joint replacement. Ordinarily, when a joint is removed and repaired, it is necessary to install a replacement length of cable of 3 metres with the effect that each joint repair leads to two joints in the repaired cable. After SEPD had repaired the circuits at the location of the removed sheath, it re-ran the sheath tests on the rest of the 7.2km circuits; the results of those tests indicated that the cables failed to meet the required standard at the time of 100MΩ resistance or higher in the sheath test. It was Mr Phillipps’ view that this sheath removal had masked poor workmanship on the remainder of the circuit, and it is probable that the results of the Pre-Energisation Tests would not have passed SEPD’s minimum requirements if they had related to the entire circuit, as SSEN believed they did pre-energisation. As I refer to further below, the independent Lloyds Register (“Lloyds”) report concluded, ‘there only seems to have been one possible motive for the removal of the screen wires which would be to prevent the detection of sheath faults during testing so that the connection would be energised before 31 March 2016 so enabling the wind farm operator to claim the higher export tariff’.[22]Mr Dickson described how, at this point, SEPD was not prepared to re-energise the circuit until it had been repaired properly. SEPD had to go through the process of locating all the sheath faults on the cables. SEPD would dig down to find the cable, look at the quality of it, cut out the relevant section and send it off for inspection.[23]By 27 April 2016, on which date there was a meeting between personnel from Modus and SEPD including Mr Phillipps and Mr Dickson, it was reported that the following fault works had been carried out:
“- 6 Sheath repairs at PV substation cut out & sent to jointing school - 2 joints in Joint Bay 6 cut out and replaced; - 3 at Joint bay 13 cut out and replaced; sheath fault located at Joint Bay 15; 5 cores good from end to end (continuous sheath) C - Circuit 1 – Red is faulty, yellow faulty - Only holding 1200kV. - ¾ of cable route cleared of sheath faults. From Wroughton PV to Joint Bay 13 is clear, other side of the railway to Toothill - still possible faults.”
[24]Other issues then reported included unrecorded repairs and that at the joints, the cables were not in trefoil. ‘Trefoil’, in this context, means the three cables bundled together into a triangle and kept in place with cable ties. The meeting minute also referred to a need to ‘partial discharge’ (or ‘PD’) test the entire cable route before energising again to ensure everything ‘was okay’. SEPD was going to recommend an independent company who could carry this out. A PD test is a test which can be carried out when the cables are either live or not, and its purpose is to identify insulation defects. Mr Phillipps gave evidence that he did not believe this test was, in fact, carried out.[25]SEPD informed Lloyds, the accreditation organisation which operated the National Electricity Registration Scheme, of their particular concern about the circumstances surrounding the initial sheath removals. Lloyds carried out an investigation, to which reference has already been made. On 22 April 2016, Lloyds suspended Modus’ membership of the National Electricity Registration Scheme. In May 2016, Lloyds produced a report, which identified multiple issues with the circuits. The issues identified included the following:(1) insulating material had been applied around the cables, indicating the presence of sheath repairs, but without any record of such repairs having been carried out;(2) a section of the earth screen wires beneath the tubing had been removed and tests indicated open circuits on all six cables;(3) there were no cable marker boards;(4) the cables were laid flat rather than trefoil adjacent to joint positions;(5) there were numerous sheath faults and unrecorded sheath repairs at various points along both circuits;(6) minimal backfill sand was present and the backfill contained sharp, gritty material which may have caused the penetration damage to the joint outer covering;(7) the fibre optic cables were laid incorrectly, in that they were laid direct into the ground without proper duct protection in that the green outer duct had twisted round such that the runs of the individual inner ducts changed colour at various points along the route.(8) The Lloyds Report concluded:
“the quality of the installation was below that expected from a NERS approved contractor and had resulted in a significant number of sheath faults, some of which had not been recorded on the as-laid drawings.”
[26]In its Defence, Modus admitted (1), (4) (6), (7) and (8), contending that they were minor and/or repaired by Modus and/or administrative so as not to compromise the integrity of the circuits. As to (2), (3) and (5), Modus attributed these faults to the unauthorised works. In relation to backfill, Modus are reported to have advised Lloyds that the backfill material used was 0-4mm limestone which was SEPD’s specification, and at least on the face of the Lloyds Report it does not appear that this contention was contested.[27]In an exchange of emails between Mr Crofts (also of SEPD) and Mr Dickson on 25 May 2016, Mr Crofts gave an update on the ongoing issues with fault detection and repair. He described issues with joint bays 14 to 17, with low MΩ readings being achieved, particularly in circumstances where the joints were surrounded by water. He considered that the economical, efficient use of resources and the correct engineering decision would be to ‘overlay’ (i.e. completely replace, albeit without removing the existing cable) from joint bay 14 to 17. He pointed out that what he described as ‘the healthy circuit’ as holding 5kV, but with approximately 5MΩ, which was not in accordance with the specification. He also concluded that, if possible, all the joint holes should be re-opened along the entire length of the run and re-jointed, ‘as all the issues found thus far are with the ICP’s joints, however this would more than double the amount of joints on the cable run.’ As a result of this failure to meet the specification, John Baker (Procedures and Investigations Manager, a senior technical authority within SEPD) reviewed document PR-PS-063 and agreed to reduce the requirement to 10 MΩ at 5kV, essentially making it easier for circuits to meet the new requirements whilst not increasing the risk of failure in the future. Mr Baker sent an email to Mr Dickson on 27 May 2016 saying ‘I am taking a more pragmatic view in that an average leakage of current should be 0.5mA and with a 5kV tester equates to 10M ohm. Whilst the update to PR-PS-063 is still to be issued I would accept values in excess of 10M ohms as being satisfactory for Wroughton’.[28]On 13 June 2016, SSF wrote to SEPD, and was strongly critical about the delays to energisation of the circuits, suggesting that it was costing SSF £23,000 a day. The letter concluded:
“Regrettably, due to the slow progress made to date, coupled with lack of regular updates and a clear programme of works to completion, we must now inform you that the next step for us is to consult with Ofgem, with a view to go to determination. Whilst we would hope that we can resolve prior to determination, you will appreciate the financial impact, as well as impact on onward sale, of the solar park not being energised, is such that we feel it necessary to take these steps.”
[29]In his witness evidence, Mr Phillipps described this as ‘more of a reputational issue’ in circumstances where he saw SEPD as blameless for lack of connection.[30]At a meeting two days later between SEPD, BSR and representatives of the Chinese investors in BSR, at which Mr Phillipps was present, it was reported that the complaints made in the letter were being taken very seriously. BSR reported losses of £28,000 per day. The reduction in policy to 10MΩ was confirmed, but it was reported that all cores still had sheath faults that did not meet this value, with two having significantly lower values.[31]Two weeks later, at a meeting between the same representatives, Mr Hitchcock of SEPD explained that they were looking at a plan to re-energise the cable with some sheath faults remaining outside of their policy, by which Mr Hitchcock meant the minimum resistance, now reduced to 10MΩ. He said that, ‘this would be with the caveat that the supply may not [be] as reliable as they would like and on condition that SSE will need to isolate the supply again in the future to carry out further repairs to get the cable up to policy.’ Mr Hitchcock stated that full joint replacement would also be an option.[32]The following month, on 11 July 2016, Mr Phillipps emailed Mr Baker and others from SEPD about recording the details of the call they had had that afternoon on the subject of energisation, stating that:
“The question as to the extent of works which should be undertaken. The best case is to re test the circuits following isolation and review the results. Re energise and carry out a regime of outages and tests at 6 monthly intervals until be are confident that the circuits are not degrading further. Worst case is to take the outage and test then systematically excavate each joint bay on a rolling program as provided to the customer and removal all joints on circuits that do not meet the 10M ohm criteria, a two stage program has been provided to the customer and is circa six months carried out over two financial years. This will result in compensation claims from the land tenant for crop damage and reinstatement of access roads and land in the join bay area. May in fact mean that we are removing good joints from the network. The doubling of the amount of joints on the circuits increasing the risk of future failure. Potential damage to circuits and joint adjacent to the works and currently meeting the required criteria. SEPD will become liable for any reinstate on highways opening notices. May leave SEPD with a large bill for works that are undertaken that can not be recouped from the ICP this cost if unrecoverable will need to be capitalised in some way and may not have any widget based health improvement score associated with it.”
[33]The point is made by Modus, with justification, that at least at this point the ‘worst case’ was being seen as complete joint replacement, rather than full replacement, although the email did highlight the disadvantages of such a remedial scheme, in terms of the doubling of joints on the circuit thereby increasing the risk of future failure, and potential damage caused during the joint replacement works which would take place, by definition, in and around the existing exposed circuits.[34]The following day, Mr Phillipps wrote to SSF setting out the programme ‘for Temporary energisation’, and indicated, as had been discussed, that following the energisation for the purposes of commissioning, the cable would be tested and the next steps would be considered. The letter also provided the results of sheath testing between various locations. It can be noted that where Circuit 1 from Joint Bay 13 to joint bay 14 had been completely replaced, the readings for all three cables within the circuit were measured in GΩ. Of the 12 other results, 6 showed readings below 10MΩ.[35]On 18 July 2016, Mr Hitchcock wrote to Mr Baker, copying in Mr Phillipps, noting the latest sheath tests across the entire circuits. The results were as follows: Circuit 1 L1 5040V @ 15.58 MΩ L2 4871V @ 3.36 MΩ L3 4942V @ 5.0 MΩ Circuit 2 L1 4875V @3.4 MΩ L2 4907V @3.99 MΩ L3 4949V @5.17 MΩ[36]As Mr Hitchcock then noted, the results did not meet the policy requirement of 10MΩ@5kV “or the reduced requirement of 5MΩ”. There was no further reference in the documents to this ‘reduced requirement’ and both sides proceeded on the basis that the only contractually permitted reduction was to 10MΩ@5kV. Mr Hitchcock stated that the team had been unable to locate any further faults and they risked damaging the cable/joint sheaths by repeat testing. He continued, ‘Replacing all the joints remains an option but this will take months to complete, double the number of joints and may not resolve the problem’. He pointed out that he did not consider there to be any safety implication with energisation, notwithstanding the low resistance values, but following energisation to allow BSR to complete commissioning, he said, ‘we can de-energise, re-test and if necessary plan to replace part or all of the installation’.[37]By the date of the meeting between Modus and SEPD on 14 September 2016, the circuits had been re-energised to enable SSF to complete commissioning. There was an outage planned to test the cables, as had previously been indicated, the following day. It was minuted that, if the cables failed to meet SEPD’s minimum specification of 10MΩ @ 5kV, Modus had been requested to submit a proposal of works to improve the circuits so that they complied. Modus indicated a reluctance to agree to undertake any further works on the cables as they had not been paid (by BSR) for the original works. The other option discussed was for SEPD to carry out the rectification works and to recoup the costs from Modus. The minutes also indicated that the faulty joints cut out of the circuit had been sent off for independent investigation to ascertain the cause of the faults. This was an investigation by EA Technologies (‘EA’), the results of which were provided in December and are referred to further below.[38]The testing referred to ended up taking place on 29 September 2016. Out of the 6 cables across the 2 circuits, it showed only one with resistance in excess of 10MΩ. This was confirmed in a meeting between Modus and SEPD on 1 November 2016. As described in an email some time later (in February 2017), the tests did not show any marked improvement over previous test results, but the tests did not show any marked degradation either. The meeting also noted the initial findings from EA which highlighted poor quality jointing techniques, raising concerns of the quality of the remaining joints on the circuit. In respect of its proposal for rectification works, Modus said that they would not be prepared to replace remaining joints, nor to overlay both circuits. Modus also indicated that they could not claim the costs of the faults from insurers as their policy did not cover poor workmanship.[39]On 15 November 2016, at the now regular SEPD/BSR meeting, it was reported that Modus had agreed with SEPD that only the defective sections required remediation, which could take 12 weeks (working 7 days a week). BSR indicated the importance of timing given the loss of generation.[40]EA produced a report, dated 13 December 2016 (‘the EA Report’), which identified the results of their investigations. EA analysed 10 sample joints which were removed from the circuits. The joints were not randomly selected. They were the joints which had faults or had been identified as sub-standard by inspection. The EA conclusions included the following criticisms:(1) the abrasion of the outer sheath was of a variable standard and the dimension of 100mm was not complied with on most of the joints as required by the jointing instructions;(2) braid wires at joints extended beyond the joints moisture barrier by between 10-35mm (at different locations), reducing the protection from moisture ingress and resulting in low sheath insulation resistance value when tested;(3) a temporary wire binder was left in position in one location, when it should have been removed;(4) there was poor core preparation of the semi-conducting layer on the strippable core screen cable resulting in an uneven finish, which would eventually lead to degradation of the joints in service;(5) EPR tape was missing from constant force springs at joints. Two layers of EPR tape should have been applied, but, in some locations, there was no tape at all and, in other locations, PVC tape had been wrongly applied;(6) where the braid protruded from the roll spring, it had not been trimmed in level with the copper wires. In some locations, the excess braid was folded back over the roll spring, but not all of the wires were folded back;(7) some of the cable used did not contain any water swelling tape over the copper wire screen, which reduced the ability of the tape to prevent the movement of water around the copper wire screen, leading to a low sheath resistance;(8) the use of sharp/coarse backfilling material caused external damage to the joints with minimal fine fill in some locations. The impact damage caused as a result of the inadequate backfilling material permitted water ingress causing green Verdigris and resulted in damage to the internal jointing components that would reduce the intended stress control of the joints and eventually lead to electrical failure of the joints; and(9) repairs had been purported to be carried out by covering joints in heat shrink repair sleeves, however: (a) there was a failure to remove excess sealant off from around the end of the sleeve; (b) in some locations, multiple sleeves had been applied to the joints indicating damage to the outer cold shrink damage and the failure of the first repair to rectify this issue; (c) wrinkle marks and an uneven surface on the heat shrink repair showed that the tube had not been fully shrunk, as it should have been, leading to susceptibility to mechanical damage and inadequate flow of materials under the sleeve; (d) the adhesion between the cable sheaths and the repair sleaves was poor, likely as a result of poor abrasion, poor cleaning of the cable jacket or a lack of heat when shrinking down the sleeve; (e) the Repair Sleeve Instructions states that the over sheath of the cable should only be abraded for 75mm, but this was not achieved; (f) the quality of the abrasion found under the repair sleeve was either entirely absent or poor with only light abrasion found; (g) the Repair Sleeve Instructions state that 38mm mastic should be applied under the repair sleeve. However, in some locations no mastic was applied at all, in other locations mastic was applied over the repair sleeve rather than under the repair sleeve and, where mastic was used, the mastic was only 18mm wide and had little adhesion to the repair sleeve. As a result, there was a reduction in the protection provided from the ingress of moisture, such that moisture was present under the repair sleeves.(10) The EA Report concluded that:
“the quality of the work raises concern regarding the jointer training, level of competence and work conditions during the installation.”
[41]In respect of the foregoing, Modus admitted, in its Defence, (1) to (7) and (9); it denied (8) on the basis of its comments in the Lloyds report, referred to above, that the backfill material was to the SEPD specification. No other evidence was adduced to support this contention. It admitted the wording of (10), contending that the conclusion was not ‘entirely’ attributable to Modus.[42]The EA Report concluded, amongst other things, that if other, similar joints remained, and poor quality backfill was still present, the probability of failure of this cable circuit was high in the short to medium term due to the ingress of moisture into the joint/cable, the likelihood of partial discharged activity and the impact damage to the internal joint components. It said that corrosion of the copper wire screen could result in a reduction in the level of protection offered to the connected equipment and personnel who may be working near these circuits. It therefore stated that, ‘consideration should be given to the replacement of this cable circuit because of the potential safety risks to personnel and the likely continuing degradation of the cable’. Modus accepted, as they must, the fact of this conclusion, but emphasised the contingent nature of the potential issue (…if other joints….), and noted that the advice was not ‘definitive’.[43]Following the issuance of the report, Modus and SEPD met on 24 January 2017. The minutes stated that:
“The General conclusion from the E.A Technology report was that the joints had failed due to poor Jointing Practices. One of the recommendations from the report was to replace the cable circuits. SSEN stated that the findings of this report has dented their confidence in the quality of the remaining joints on the circuits and requested that these joints be replaced.”
[44]The minutes also noted the rejection of Modus’ proposal to replace the cable between Joint Bay 12 and Toothill substation, and it was agreed that the joints which had been replaced and witnessed by SEPD during the fault location works would not require replacing. It was agreed to include the solar farm owner in the forthcoming meeting to discuss proposals. Thus, notwithstanding the EA recommendation, at this point SEPD were not anticipating the replacement of the entire cable.[45]Mr Phillipps explained in his witness evidence that at this time SEPD did not wish to fund the replacement of the cables out of its own pocket. On 9 February 2017, Mr Phillipps wrote to a Mr Virno of Rockfire Capital Limited (‘Rockfire’), a company which had a significant financial interest in the solar park and, as a consequence, its continuing ability to provide power into the network via the circuits. The email set out three remedial options open to discussion:(i) full replacement of both circuits and all the joints at £2,795,069;(ii) replacement of all joints and up to 10% partial replacement of the circuit at £1,046,631; and(iii) replacement of all joints that had not already been replaced which would have been £878,860.00. Mr Phillipps confirmed in evidence that option (i) was an ‘in-line replacement’ (rather than to a new, separate route), and at the time this envisaged being undertaken whilst the customer remained connected to the grid. In his witness statement, Mr Phillipps explained that there was a risk with options (ii) and (iii) in that, in essence, in neither scenario was there a certain scope of works from the outset. A full replacement was, he said, much more controllable, as all the risks could be built into a fixed program and quoted for by the contractor. Although Mr Phillipps accepted in cross-examination that there was no ‘formal’ risk assessment, and that, indeed, it was not his particular job to manage the risks, it is plain that the different options involved different risks, and I accept his evidence that the risks involved were being considered at the time, even if not being written down formally. For example, on 20 February 2017 Mr Chigbo of SEPD was providing comments on a draft specification for works based on Mr Phillipps’ notes. Mr Chigbo stated, “I wanted to have a brief discussion with you about the proposed repair works as to the replacement 90% of the entire cable circuit. Which EA Tech put down as their first recommendation. I strongly feel that the risk in just doing the repair works is very high compared to replacing the majority of the cable. Let me know when you are free so we can discuss”. It was not suggested to Mr Phillipps that the substance of the matters he was raising by way of risk implications identified for the various options were themselves misconceived or unjustified, no doubt because there is no evidential foundation from which such a positive assertion could have been properly put by Mr Smith.[46]A more formal estimate of costs was then provided to Rockfire a few weeks later, on 2 March 2017. This estimated(i) at £3,2000,000;(ii) at £950,000; and(iii) at £850,000, each plus VAT. Full (in-line) replacement was estimated to take 24 months, and the other options 6 or 7 months, but during which period the solar farm would not be able to export electricity.[47]On 23 March 2017, there was a further meeting between Modus and SEPD, at which it was reported that Modus had submitted their rectification work plan. On the basis of the most recent testing, the report indicated that 6 lengths, both between Joint Bay 14 to Toothill and from Joint Bay 12 to Wroughton and across both circuits were out of specification. The proposal sought to concentrate on getting Circuit 1 up to specification in a first phase of works (in 2017) and on Circuit 2 in a second phase (2018). The plan involved excavating to expose joints, testing and installing new joints as necessary. The planned programme was 3 months and was subject to and critically dependent upon the works being carried out in dry conditions. Both circuits were to be isolated during both sets of works. Modus indicated that, whilst ultimately it would be for SEPD determine whether to adopt the plan, it did not have the financial strength to either replace all the joints or overlay the entire route.[48]In April 2017, a report was prepared by Durkin & Sons, one of SEPD’s framework contractors for cable and capital works. It considered two options, having undertaken a site visit. The first was partial joint repair, and the second a replacement, along the existing route. As to the first option, various potential difficulties were highlighted, a number of which led to the conclusion that it was recommended there be an investigation regarding the existing duct installation which would be required before accepting any liability for its suitability. Mr Alyah fairly accepted that because the circumstances in which the report was prepared, and the information provided to Durkin, was unknown, the report was of no assistance in assessing the future risks associated with the circuits. That said, one of the important points made (‘the network cannot be warranteed [sic] as the existing cable installation remains suspect and already faults in winter/wet conditions. Contractor cannot accept liability for works not undertaken by them i.e. duct installation and cable installation’) does not depend on a detailed understanding of particular risks: it was a statement of the unsurprising and usual position that pertains to a repair solution (the end product of which entails the interaction of both the original and the repair works for which different parties have legal responsibility) rather than complete replacement (where responsibility can lie with a single party). Durkin also pointed that ‘due to the amount of variables in respect of the existing installation and the requirement to continually test back it is not possible to state with any certainty a completion date’ and warned, ‘we would be installing a further minimum 96 joints, or weak points onto already weakened cables’. The steer away from carrying out a joint replacement solution was clear. The contemporaneous views of an independent (although not completely uninterested) third party when asked to consider a partial remediation as to the practical and technical concerns and the benefits of competing options cannot be discounted as irrelevant.[49]On 15 May 2017, Mr Phillipps was involved in an email exchange during which the possibility of ‘unadopting’ the cables was discussed, so that the customer could affect its own repair solution which would not involve being off supply for up to six months. In evidence, Mr Phillipps explained that the value placed on the cable for the purposes of selling back was £1, equivalent to the value placed on an asset beyond its life cycle. Mr Phillipps made reference to loss of £50k per day, notwithstanding the previous communications which referred to lower figures. On any view, the potential losses to the customer were significant. Mr Phillipps concluded, ‘The project has already been subject to a CEO complaint and Colin Nichol [Managing Director of SSEN] has been involved in one meeting with the previous owners before the site was sold, so it is a high profile issue…’. That option, in the event, did not seem viable for either SEPD or Rockfire.[50]At a meeting on 30 May 2017, between SEPD, Modus and Rockfire, Modus indicated that they would not consider further rectification works until their dispute with BSR had been resolved. However, Modus offered a fund of up to £660,000 as a contingency pot that would be paid to SEPD to facilitate the repair of any future failings in the circuit. This was minuted as being unsatisfactory to SEPD: the proposal did not increase confidence in the long term performance of the circuits, and would not enable SEPD to be able to provide reassurance to the end customer (the solar farm) that they would not experience unplanned outages due to faults in the future. In addition, SEPD would not be able to address land owner concerns regarding repeated access and disruption due to an unknown number of faults over an unknown period of time. Mr Phillipps is recorded as saying that SEPD would now ‘proceed with carrying out the rectification works, in the most economical way to ensure the long term performance of the circuits and to realistically manage the end customer and affected landowners/tenants expectations of minimal disruption….’. This was then stated to be the replacement of all the original joints on both circuits that had not already been replaced during previous works and any cable sections found to be faulty during testing of the works (i.e. what had been referred to as option (iii) above). Modus stated that they did not have the funds to cover these costs and ‘would seriously put their company in jeopardy’.[51]By mid-June 2017, however, clear views were being expressed internally that replacement of the cable was the better option. On 12 June 2017, Hilton Howsen, the Project Manager (Design) for SEPD, stated:
“Due to the uncertainty over the quality of the workmanship, the Durkin Option 2 [i.e. replacement along the same route] appears to be the most feasible and cost effective option. In addition to the replacement of cables and joints, consideration should be given to removing the backfill material around the ducts and replacing it with sand or CBS. Also, the reinstatement materials and top soil should be installed to the correct specification. If a double circuit outage cannot be tolerated for an extended period, it would be necessary to consider a third option of constructing one completely new circuit offline, and rehabilitating one existing circuit later.”
[52]Mr Dickson responded, “I totally agree with your summary that Option 2 would be the preferred option. Unfortunately as SSE will be looking to recover the costs form the ICP who installed these circuits, we have to be very careful how we proceed. If we can get the contractors to give us price on both options this will give us some evidence to present to senior management who can then make the final decision how they would like to proceed with these works. Could you put together a bill of quants for both options….”[53]At the end of June 2017, there was an exchange in which the Lead Project Manager for Cables and Over Head Lines expressed the view, by reference to experience on a different project, that they should just concentrate on joints, by which he meant joint replacement as a remedial solution, rather the replacement of the cable which, because it passed a pressure test and had been in service for about 18 months, they could regard as fit for purpose. Mr Phillipps accepted that he did not respond to this at the time, but pointed out that Mr Rooney was a civil engineer rather than an engineer with electrical qualifications. Either way, it is evident that different people within SEPD saw different technical solutions as being the way forward. It is not correct, as urged upon me in submissions by Mr Smith, that the universally acknowledged preferred option within SEPD was joint replacement: it clearly was not. It was not Mr Dickson’s view, who plainly preferred the option of cable replacement for the technical reasons advanced to him by Mr Hilton.[54]On 4 August 2017, Mr Smart sent to Mr Dickson an excel spreadsheet entitled ‘CS BB financial analysis of options’. This was accompanied by a word document entitled ‘Remedial Proposals for Wroughton 33kV’ and which was stamped ‘Draft outline for initial comment’, into which Mr Dickson had inserted his comments. Following his changes to the introduction, it included the following text (largely from Mr Dickson’s drafting), after setting out the original six sheath faults which were identified close to the PV substation:
‘It was subsequently found that there were several sheath faults on the cables. Further fault locations were carried out to locate these sheath damages, many defects were found. The faulty joints were inspected by an independent body, and the quality of the Jointing was found to be substandard. The reports recommendation stated that consideration should be given to the replacement of the cable circuit because of the potential safety risks to personnel and the likely continuing degradation of the circuit. It was agreed by SEN Policy that the minimum request would be to replace all the joints on the circuit. Several meetings were held with the ICP to give them the opportunity to carry out the remedial works. As no agreement could be reached it has been decided that SSEN would undertake these works and seek to recover the costs from the ICP. It should be noted however that the cable has not faulted over the last 12 months. Following a recent meeting with strategic investments the Solar Park Owner has stated their concern over the loss of generation revenue due to the outages required to carry out the remedial works. They would prefer any outages to be taken in Autumn/ winter time to reduce these losses. The developer Solar Park Owner is now awaiting our proposal for carrying out remedial works. It is understood that some contribution will could be made towards the remedial works if there is an option to reduce the time that the Solar Park is offline. Several options are proposed in this brief paper for discussion prior to arranging a meeting to agree the most appropriate way forward with the developer Solar Park Owner. …The ICP has indicated that they do not agree that there is a need to replace all the joints and that they do not have the funds to cover the costs for such an undertaking. Several options have been considered for the proposed remedial works and these are outlined further below. The most important factor in coming to the recommended proposal is the minimal loss of generation time. Partial replacement/overlay of sections/joint replacement would all provide a compromised installation and severely impact the generation time and create a large financial impact because of that. Conclusion The most commercially sensible option considering the impact on the loss of generation, which is estimated at £50k per day, is to completely overlay the existing circuits. There are two horizontal directional drills along the route and it is proposed that these are maintained and reused. The existing easement is sufficient to allow another trench to be installed whilst maintaining the existing circuits live. The downtime would be minimised with this option as the works required that will impact the generation is the replacement of the cable within the horizontal directional drill and the final terminations at either end. This option will also present SSEN with the confidence to accept responsibility for the circuit on an ongoing basis. This option is dependent on the developer contributing to the capital cost of replacement of the defective circuits.’
[55]In cross-examination, Mr Dickson accepted that the reference to the ‘minimum request’ of replacing all the joints was what SEPD wanted at the time; however the context of this, of course, is that the ‘minimum request’ was a reference to SEPD’s ‘request’ to Modus to carry out remedial works at Modus’ cost (so that capital expenditure was not required by SEPD). As the text goes on to state, Modus indicated that they did not agree that there was a need to replace all the joints and, as they had indicated previously, they did not in any event have the funds to cover the costs for such an undertaking. No agreement could be reached with Modus, therefore, and it would be for SEPD to carry out what it considered to be the appropriate remedial works at their own cost, subject to any potential recovery.[56]The accompanying table and spreadsheet set out the options. Option 1 was joint replacement, at a cost of £551,080 with £8.0m of consequential loss (160 days x £50,000); Option 2 was cable and joint replacement within existing ducts at a cost of £1,415,920 with the same consequential loss (this is referred to as ‘in-line replacement’); Option 3 was cable and joint replacement with a plough at a cost of £1,848,825 with consequential loss of £750,000 (15 days x £50,000); Option 4 was complete circuit replacement at contractor rates at a cost of £1,920,270 with the same consequential loss; and Option 5 was complete circuit replacement at in-house rates, at a cost of £1,656,357 and the same consequential loss. It might be noted that the ‘in-house’ rates effectively exclude the cost of what appears to be labour, presumably on the basis that there is not a ‘cash’ cost to the business using existing employees. However, this is not really a valid comparison, in circumstances where using in-house labour does not, in reality, generally come at zero cost. In any claim for damages, SEPD would be entitled to claim the notional in-house cost of employing its own workforce.[57]The spreadsheet is as follows:[58]It is clear from the text within the ‘Conclusion’ quoted above that Options 4 and 5 involved the routing of the cable in the existing easement, in a separate new trench with new ducting, in order to maintain the existing circuits as live during the works. It can be seen that some cost differential existed between Option 2 and Options 4/5. Although it is not stated in terms, the figures for ‘Option 2’ (in-line replacement) seem to be third party contractor costs: this can be discerned from the fact that costs are claimed for various items in both Options 2 and 4, but excluded from Option 5. On the face of this document, therefore, the comparison is between c£1.4m for using the existing ducts and £1.9m the new trench/ducts. This delta of c£500,000 should be treated with some caution in circumstances where(a) these figures differ from those quotes referred to above provided to SFF for in-line replacement, of c£2.9m and £3.2m; and(b) the actual costs incurred for complete replacement were £2.4m (rather than £1.9m).[59]In terms of other factors relevant to each of the options, the following technical risks/advantages set out in the document included the following: Option 1: compromised final installation, with potential faults remaining on the existing cable; additional risk with twice the amount of cable joints on the remediated circuits; Option 2: re-use of existing ductwork installed by the ICP which may be defective; Option 3: ‘produced’ [reduced] level of protection in agricultural areas as cables are directly ploughed; slightly higher risk of sheath damage during cable installation; higher safety risk during installation, ploughing new cable circuits adjacent to the existing live circuit; Options 4 and 5: installation of system under the control of SEPD, providing greater confidence for future liability.[60]Consistent with the stated intention that the developer would contribute to the capital cost of replacement of the defective circuits, there followed correspondence from Mr Dickson to Ms Warnock, PA to the CEO of Rockfire, in October 2017 chasing their formal position on a contribution, stating that such a letter would be critical in the decision of what type of rectification works would be progressed.[61]On 3 November 2017, the CEO and Founder of Rockfire emailed Mr Dickson, seeking to emphasise the importance of avoiding an outage during the anticipated remedial works, in terms of the wider social impact of a lengthy interruption to the supplies on the local council and the fact that this was a large public interest project. This email stated:
‘By way of background as discussed Swindon Solar Farm Limited is 100% owned by myself, but was in part funded by a long-term investment being made by 3 local authority’s namely Warrington, Thurrock and Newham. As you know we lease the land from the science [museum] group and in addition we provide extensive payments from the revenue generated by the project to local community schemes. In simple terms the Swindon project is a very public one with some very big public backers that relies on the income we generate each year to in the main assist with the provision of front line services to the residents in their areas, the funds are used in a variety of ways ranging from adult and social care to innovative projects to help people in fuel poverty so in simple terms this is a large public interest project.’
Having identified the wider impact of the loss of the solar parks revenues in a way that was plainly designed to put pressure on SEPD, notwithstanding the absence of any legal obligation to recompense SSF for lost revenues, the email then set out the proposed resolution working with SEPD, as follows:
‘1. SSE is to agree to lay a new cable next to the existing one as soon as possible in qtr. 1 2018 this would then only mean we would have a small outage programme for connections etc. 2. By SSE agreeing to a new cable this would guarantee SSE and us as owners that a correct cable fit for purpose and duration would be in place going forward. 3. As owner, we have recognised that it would appear SSE has been defrauded in some way in agreeing to adopt the current cable and SSE will need to take the appropriate legal action against the relevant parties to recover the various sums owed to affect the new cable etc. we have a lot of data and can get hold of additional information to assist SSE in such a claim and would be willing do so in return for the confirmation on the cable etc. 4. In addition, as owner we are also willing to look at making some form of financial contribution to SSE to assist with the new cable works.’
[62]Mr Dickson replied ten days later, stating that SEPD had had an internal meeting to discuss the proposals for repairing/replacing the cables, and asked to arrange a meeting/ call to discuss its proposals and in particular the potential contribution towards an ‘enhanced’ scheme to replace the cables. The reference to the ‘enhanced’ scheme was a reference to one in which the cables were routed in a separate trench allowing the existing circuits to remain in use during the period of the works.[63]Contemporaneous records include an undated extract from what appears to have been a later, updated version of the same options paper. In respect of the position of the Solar Park Owner, the report stated, after noting (as had the previous version) that ‘some contribution could be made towards the remedial works if there is an option to reduce the time that the Solar Park is offline’:
‘After Further meetings with Rockfire they are now stating that the only option they would accept is for the cable circuits to be replaced. They have agreed that the Solar Park would make a contribution towards the enhanced scheme with a view that SSEN would recover the reaming costs from Modus. … It has been suggested that a Rechargeable job should be set up to enable the solar Park to pay their contribution toward the project. We would then look to recoup the remaining costs from Modus. There is no guarantee that we would be successful in recouping all the remaining costs.’
[64]Evidently following discussions, a further letter was in due course provided by SSF on 30 January 2018. The letter said:
‘As stated previously it is imperative to us that the solar park is not out of action for long periods during the summer months and as such the agreement will be that SSE will lay a new cable next to the existing one as soon as possible in Quarter 2 2018, with the work expecting to last up to 4 months and outage times minimised. A guarantee will be provided at the end of the works that the cable is now fit for purpose with an expected life cycle to match the solar park.’
[65]The contribution was to be £700,000 paid over several instalments, and made conditional on part or all of the contribution being repaid if SEPD was successful at recovering any expenditure back from Modus.[66]Mr Dickson confirmed in cross-examination that there was no contractual liability on the part of SEPD to recompense Rockfire in respect of its losses for outage, and it could have said, in effect, ‘tough luck’. When asked directly why SEPD did what they agreed to do, Mr Dickson’s answer, which I take to be true, was:
‘I think It was the pressure from the solar farm and, obviously, the experts reports backing up with some concerns, so there was obviously an unknown risk of how long this circuit would last.’
[67]Mr Dickson was therefore clear, and I accept, that the pressure from Rockfire was one of two principal influencing factors in decision making. Although in circumstances where Mr Dickson said in terms that he did not make the ultimate decision, and he was not aware of what leverage existed in the absence of a liability to pay to SSF consequential losses, the contemporaneous correspondence makes clear that the pressure being put upon SEPD by SSF related to the importance of continued generation in the summer months to the local community.[68]The second influencing factor was the unknown risk of how long a repaired (rather than replaced) circuit would last. This concern was clearly set out in the options paper referred to above, which considered that restricting the solution to replacing the joints would leave SEPD with a ‘compromised final installation’. Other contemporaneous evidence, referred to above, also demonstrates that this remained a concern actively being articulated within SEPD at the time, and was a continuing concern which both Mr Phillipps and Mr Dickson repeated in their evidence. I do not consider that it is likely on the evidence I have seen and heard that (unless perhaps in circumstances where Modus had agreed to fully fund the works, which did not happen), SEPD would ever have agreed to carry out ‘Option 1’ and saddle themselves with a ‘comprised final installation’. Moreover, even if they had at various times contemplated this, that contemplation did not fix for all time what an objectively ‘reasonable’ decision was.[69]A formal agreement between SEPD and SSF was then entered into, some time later, in November 2018 (‘the Remedial Agreement’). The recitals set out as follows:
‘3. SEPD and the Customer agree that the cables referred to in the Adoption Agreement are defective and do not meet the standards required pursuant to the Adoption Agreement. 4. SEPD’s preferred method for resolving the defective cables will result in the electricity supply to the Customer’s Property being interrupted. 5. The Customer has a different preferred method for resolving the defective cables which reduces the length of time of the interruption albeit at a higher cost. 6. In consideration of SEPD undertaking the Customers preferred method of resolving the defective cables, the Customer is willing to contribute to the additional costs incurred by SEPD.’
[70]The Remedial Agreement provided for cable replacement to be carried out on a different route, not alongside the existing route. This was therefore a move away from ‘Option 5’, which had been predicated on an ‘overlay’ in a trench alongside the existing route within the same 3m easement, albeit keeping the existing circuits live during the works. Mr Phillipps’ evidence was that this development was because the landowners and tenants (whom he described as ‘unhappy’ having dealt with access during the original and the remedial works) could have made further access to the existing cable difficult. This was given as a reason independent from the ‘outage point’. Mr Phillipps pointed out, and I accept, that there was considered a risk of disturbing the existing circuits if working within the same or even an immediately adjacent easement (at least if the existing circuits are live).[71]The Remedial Agreement also provided for the agreed contribution of £700,000 and an obligation to make a repayment, less a contribution towards costs of obtaining any recovery, should recovery be made against any third party in respect of the defective cable. Mr Dickson could not be sure, when asked, what the ‘preferred method’ the Remedial Agreement made reference to, but accepted it was likely to be Option 1 or 2. As set out above, I consider it unlikely that at this stage the ‘preferred method’ referred to the replacement of joints, given SEPD’s concern that this would leave them with a final installation which remained ‘compromised’. This is also reflected in Mr Dickson’s evidence quoted above, as well as Mr Phillips’ evidence which I accept, that ‘SSE did not want to pay for replacement works. If funding had not been an issue, SSE would have made the decision to replace the circuits. If we’d had the funds and mechanisms to replace the circuit, we would have done so, because that was the right decision. This has probably been the most problematic connection we’ve had: with all the internal meetings, customer meetings and updates, it was very time consuming for all involved.’[72]Therefore, the reference within the recital to the Agreement to SEPD’s ‘preferred method’ must have (at least by reference to the 5 Options identified above) been a reference to Option 2, in-line replacement, the only Option which(a) replaced the entire cable in existing ducts but(b) required a lengthy outage.[73]Mr Smith suggested that the Remedial Agreement also involved SEPD taking on a warranty in respect of the quality of the works, such that any future outages could give rise (if caused by a breach of that warranty) to damages for lost generation revenue which were otherwise excluded from the Connection Agreement. It is neither necessary nor appropriate to express any definitive view on this, in circumstances where the proper meaning of the Remedial Agreement may be the subject to some future dispute between SEPD and SSF. It is sufficient to say that it is not clear that such a significant liability was taken on by SEPD, and one reading of the Remedial Agreement is that the rights and liabilities of the parties in respect of the new cable were as they were under the existing Connection Agreement.[74]Pursuant to the Remedial Agreement, the ‘full replacement’ works were carried out, and SEPD were paid the anticipated £700,000 contribution by SSF. The actual cost was £2,453,327.75. It is agreed that, notwithstanding some evidence given by Mr Dickson, the work was carried out by third party contractors. The sum is therefore less than the quotes provided to SSF for in-line replacement early in 2017 (c£2.7 and c£3.2) but more than the estimate for Option 2 at c£1.4m (and, indeed, more than the estimate for third-party cost of complete replacement of c£1.9m). E. The Expert Evidence[75]For the reasons already explained, the only expert evidence was from Mr Alyah, for the Claimant. Although there were some shortcomings in his approach, which were appropriately explored by Mr Smith in cross-examination, I reject the submission that, taken as a whole, his evidence was unsatisfactory. I take the limitations of some of the analysis he has undertaken into account, but for the reasons I now turn to, I consider that the key parts of his technical analysis in support of the reasonableness of SEPD’s decision, from a technical perspective, were robust and cogent.[76]Mr Alyah accepted, as is apparent from the face of his report, that he based his conclusions on the information drawn from the reports which have been referred to above, and in particular the photographs within the EA Report, and the test reports showing the continued failure to achieve the reduced 10MΩ @ 5kV requirement for resistance. Mr Alyah had not undertaken his own examination of the cables or joints, or carried out, for example, his own tests on backfill or soil composition.

Nature and Extent of Defects

[77]A number of conclusions reached by Mr Alyah related to what original ‘unauthorised’ works, and he fairly accepted that if (as I have concluded) SEPD has not established that these works are themselves representative of the wider Modus work, then they are not directly relevant to the matters to be decided. Mr Alyah also fairly accepted that some of the photographs may not show the works as they had been when first exposed, if for example they were taken out of ‘trefoil’ configuration for the purposes of inspection. Mr Alyah’s report included a criticism that the jointing of the three cables for each circuit did not appear to have been carried out at 500mm distances, but Mr Alyah conceded that the rectification works were also not carried out this way, under SEPD’s direct supervision, and that it was not a point which concerned SEPD at the time, nor raised in the contemporaneous reports as a problem which, for example, played any part in the choice of rectification method. Clearing away these tangential criticisms, it is clear that Mr Alyah’s focus was on the quality of the joints which had been inspected in the EA Report, and the reasonableness of extrapolating the results of that inspection to substantiate a legitimate concern about the quality of the circuits as a whole.[78]At paragraph 117 of his report, on the basis of his review of the EA Report, Mr Alyah tabulated the nature and type of defect within the joints which were inspected, as follows:[79]Mr Alyah then explained how each defect was a failure of industry standards and/or the jointing instructions and/or other appendices forming part of the Adoption Agreement. None of this was challenged in cross-examination, no doubt because it was either accepted or Modus did not have any competing evidence to the contrary. I accept Mr Alyah’s description of the defects as found in the table above and that, as he explained, the workmanship in each case fell below the standards required and/or was a breach of the specific requirements of the various aspects of the jointing instructions or other appendices he referred to in 116 to 184 of his report.[80]In the same section of his report, Mr Alyah identified the implications of each of the 11 types of defect which were identified, often by reference to footnoted literature or manuals. None of this was subject to challenge from a technical perspective, either. This is important evidence which underlies Mr Alyah’s conclusions about(a) what might be discerned as to the extent of other defects and(b) the future risk of degradation of the cable. I summarise Mr Alyah’s evidence as to the impact of the defects, which I accept, as follows: (1) Lack of EPR tape over the force spring. This can cause moisture ingress and potential mechanical instability caused by the constant force spring. Without the constant force spring being securely in place sharp edges of the copper wires and mesh may damage the insulation of the cable. (2) Application of tape on the copper braid. Braids of copper wire are used as armour in XLPE cables providing protection to the insulation and other parts of the cable. Application of the tape directly onto the braid of copper wires prevents the braids from being embedded directly into the mastic applied as part of the cable joint. This in turn leads to gaps in the layers that could allow the ingress of water into the joint. (3) Temporary Binder Left in Place. Temporary binders are typically used during the cable preparation process to keep the components together while assembling the joint. However, they are intended to be removed once the final components are in place. Leaving the temporary wire binder in the cable joint poses a risk to the sheath used to provide protection to the joint as it creates an uneven surface and creates gaps within the joint. Sharp edges of the wire binder can also cause mechanical damage to the inner surface of the sheath. (4) Uneven cutting of semi-conducting screen. The screen was not removed evenly, creating uneven distribution of electrical fields which can lead to damage to the insulation and can lead to premature failure. (5) Poor Abrasion of Cable Sheath. Poor abrasion will subsequently lead to poor or reduced adhesion between the cable sheath and either the resin or repair sleave. The risks associated with the deviation of poor abrasion to the HV cables outer sheath is that it will reduce the adhesion between cable sheath and the resin or repair sleave. This can lead to water ingress which ultimately will lead to catastrophic cable failure. (6) Impact Damage to Outer joint cold shrink. Damage in the outer jacket of the joint cold shrink, can compromise the protection that the cold shrink is intended to provide to the components of the cable joint. In the case of the photograph presented in the EA Report, the damage has caused the exposure of the copper braid. The impact damage to the cable sheath increases the risk of electrical stress concentration at the screen edges which could lead to breakdown of dielectric strength of the insulation. (7) Cable sheath not cleaned under repair sleeve. The presence of dirt can lead to bad adhesion between the cable sheath and the repair sleaves. This can create voids and electric treeing in the insulation which will lead to electrical faults through the insulation. (8) Copper wire braid too long. When either the copper mesh or braid are too long and not as per specification of the joint cut position, this can lead to damage to the outer sheath of the cable. It is for this reason that is considered a defect as damage to the outer cable sheath of the cable results in potential moisture ingress as well as reduced sheath resistance. (9) Poor shrinkage on repair sleeve. The risks from this deviation include that the damaged HV cables outer sheath has not been fully sealed by the repair sleeve and as such could lead to potential water ingress and electrical faults. The failure could manifest due to a potential insulation breakdown. (10) Incorrect size mastic tape used for repair sleeve. Failure as a result of using the incorrect width mastic tape manifests due to loss of adhesion area which would then allow water ingress that can degrade the insulation of the cable and lead to electrical failure. (11) Uneven application of mastic patch seal. When the mastic seal does not fully cover the cable components within, it leaves exposed spots in the joint which are not completely sealed and as such can limit the protection offered to the copper mesh and wires. Subsequent failure would manifest due to a potential insulation breakdown due to water ingress, corrosion of wire mesh and potential mechanical instability of the joint.[81]Mr Alyah then explained his analysis of all the data touching upon the sheath testing undertaken during the investigations and prior to the remedial works, some of which have been referred to in the narrative above. Mr Alyah tabulated the results of that analysis at Appendix 4 to his report, and I accept that he did so accurately (not least in the absence of any suggestion that he had not done so). Mr Alyah’s conclusion was that, on the records available, there were 178 tests of different phases, in the two circuits performed on different occasions. Of those faults were identified during four tests. A ‘fault’ was when the insulation around the energised core fails such that the electrical energy is allowed to come out of the core of the cable and go to ground. The tests results met the specification requirements during 67 tests or slightly more than 37% of the time while the tests results failed to meet the requirements of 10MΩ @ 5kV in 107 tests or just over 60% of the time. On the basis of this, Mr Alyah’s conclusion that the two circuits failed to meet the requirements by SEPD which were part of the SSEN specifications listed in the Adoption Agreement including schedules and appendices was plainly justified, and was not, in fact, subject to challenge.[82]However, the further importance of the test results goes beyond merely establishing a continuing breach of the specification even after the 10 joints had been replaced and during the period when no actual ‘faults’ (as defined above) happened. As explained by Mr Alyah, and which evidence I accept as cogent, the very purpose of the sheath test is to check whether the cable sheath has not been damaged during installation. A lower value indicates that there is damage in the sheath somewhere along the cable. The continued low results, after the 10 joints were replaced, indicates that there remained damage to the sheaths at unknown locations along the cables in both circuits, and undermines Modus’ contention (albeit, for the reasons explained, not supported by expert evidence) that it is not possible to extrapolate from the 10 joints inspected. I do not accept the contention, not supported by expert evidence for the reasons given, that it was necessary to carry out ‘partial discharge’ (or ‘PD’ testing) in order to reach this conclusion. The conclusion is sufficiently established from the inspections and testing that was carried out as described above.[83]All of the defects described in the EA are workmanship defects. Their number and type are seemingly fairly arbitrary across the different joints, as is often the nature of poor workmanship. Without a particular explanation (for example – that all the relevant joints were carried out by a particular jointing team that it could be shown were not responsible for any other joints), it might be instinctively surprising even to a layman if the poor workmanship was limited to these 10 joints. Putting the instinctive surprise of a layman to one side, Mr Alyah’s expert evidence on the basis of his experience was, and I accept, that the amount of defects within each of the samples was so great that it is very likely that they exist in other locations as well. Crucially, however, he considered this in tandem with what he described as the ‘really really high percentage’ of test results in which the reduced specification for resistance could not be met. Indeed, in my judgment the continuing test failures after the joints which ‘faulted’ were replaced are only sensibly explained by the existence of similar defects in other parts of the cable which combine to reduce the efficacy of the insulation and therefore resistance (albeit not (yet) to the point of complete failure). Indeed, no other explanation was provided for the continuing failure to pass sheath tests (even on the reduced specification) other than the existence of the type of poor workmanship which was displayed on each of the 10 joints that was inspected. I am left in no doubt that Mr Alyah’s evidence that the types of defects identified within the EA report are likely to be widespread across both circuits is correct.

Risk of Future Failure

[84]Mr Alyah’s evidence, drawn from his unchallenged evidence about the consequences of the types of defects identified in the 10 samples, together with his view about the prevalence of those defects, was that there would be progressive degradation and an increased risk of premature failure as a direct result of the issues he identified in his report. It was put to him, and he accepted, that he had not carried out a quantitative evaluation, via a mathematical probability calculation, of the risk or other calculation in the life span of the cables on account of the defects. However, there is no evidence, for the reasons explained, from an expert identifying how just such any quantitative could be undertaken, given that it would, by definition, depend on assumptions as to precise numbers and types of defects. It would on any view therefore be highly subjective and subject no doubt to criticism of the assumptions adopted. I do not therefore consider that the absence of a quantitative assessment in the circumstances of this case detracts in any way from Mr Alyah’s conclusion based upon, as he put it in evidence, ‘studies after studies after studies that have been documented by a lot of organisations that these types of deviations will lead to accelerated degradation of the insulation and eventually lead to a premature failure.’[85]I conclude that it was objectively reasonable to assume, when determining the appropriate remedial scheme, that the defects were widespread and that they would lead to progressive degradation of the integrity of the circuits. As such, it was reasonable to adopt a scheme which addressed the avoidance of future, premature failure of the circuits.

Remedial Options

[86]Mr Alyah gave evidence as to the available remedial options. At paragraph 198 he set out that the options he had considered were as follows:(1) Partial replacement of the faulty and/or defective joints in each circuit.(2) Replacement of both circuits in their entirety through replacement of one circuit at a time, using the same trench already excavated.(3) Replacement of both circuits in their entirety in a newly excavated trench.[87]Mr Alyah accepted in cross-examination that he had not, at least generally, looked at the commercial or cost implications of each option. For a technical expert, that was not an inappropriate approach, but of course it means that his evidence only plays a part in the overall analysis of whether it was reasonable for SEPD to adopt the solution it did.[88]As to the first option, Mr Alyah accepted that he had not considered the replacement of all joints in each circuit (the option which was, at least at one point, that preferred by SEPD). There is some force in the submission by Mr Zvesper that, insofar as this was a criticism, it is misguided in circumstances where Modus had not (other than in the most oblique way) pleaded that this is the option which ought to have been adopted in order to mitigate SEPD’s losses. In any event, Mr Alyah’s evidence was that he did not consider this solution appropriate: when a joint is replaced two joints are introduced, with a cable link in between, and whenever that is done the risk of another failure is increased. The introduction of double the number of joints was also a disadvantage identified contemporaneously on a number of occasions and by different people. It was justifiably a legitimate concern, which, if implemented, would leave SEPD to maintain two circuits in which the number of ‘weak points’ (i.e. the joints) had doubled from that which they had been entitled to under the Adoption Agreement. Furthermore, joint replacement did not resolve any potential damage to cables from water ingress at defective joints, or where sheath repairs had (away from the joints) been inadequate. I am of the clear view that, objectively, joint replacement was materially inferior a solution to replacement of the circuits. This conclusion is not negated by the evidence which shows that at times this was the solution which SEPD appeared to want to adopt. To the extent relevant to the objective test, that position evolved and it was, in any event, not a universally agreed position within SEPD.[89]In relation to the second option, which is the equivalent of or at least close to Options 4 or 5 referred to above, Mr Alyah’s view was that this was, though possible, very risky to both the cables and operative working on the replacement. He explained that this option would require excavating the existing trench while the cables were in place, while ensuring that the cables and ducts were protected while the trench was excavated. During the excavation process, the risk of damage to the cables would be considerable and there was also a high risk to the operatives carrying out the replacement of the cables while the other circuit remained energised. Mr Alyah pointed out in his report that this would require special preventative and mitigation measures, which would add to the time needed and the cost of the replacement. In cross-examination, he reiterated that the scheme was possible and that he considered that the risks were significant which could be mitigated ‘to a certain extent’. He gave an example of a case in the United States where a 15,000kV cable caused severe injury to an operative who was working close to a joint which failed, and continued ‘and when you’re dealing with 33kV, you’ve really got to be very, very careful’. I consider that it was objectively reasonable to reject a solution which required operatives to work in very close proximity to a live circuit particularly in circumstances where the integrity of the insulation of the circuit was known to be deficient.[90]As a variant on the replacement option, Mr Alyah accepted that he had not considered the option of replacing both cables in the same original trench, albeit in circumstances where to minimise risks the circuits would not be live for the duration of the works. (effectively Option 2 as referred to above). It was not put to Mr Alyah that it was, technically, an equally efficacious solution. Modus led no expert evidence on which it could advance the case that it had no technical advantages over a full replacement. Mr Zvesper points out that there were contemporaneous concerns that this would require the re-use of existing ductwork installed by Modus which may be defective, and to contemporaneous concerns raised about the continuity of the duct system. In addition to concerns raised within SEPD, the Durkin report also pointed out potential problems with the ducting, and concluded that that it was necessary to investigate the duct installation before it could be relied upon. These would be reasons to conclude that, as a technical solution, it was not as efficacious as complete replacement, even in circumstances where, as I have found above, it is likely that this was SEPD’s ‘preferred method’ according to the Remedial Agreement. However, technical issues aside, the further disadvantage to this solution was that it required the existing circuits to be out of action. In circumstances where it was reasonable to keep the existing circuits live, this was not a viable solution.[91]In relation to the complete replacement option, it was Mr Alyah’s view that due to the numerous defects in the cable joints and the wide-spread presence of defects within many joint samples as well as on site, he believed that the risk of multiple failures in the circuit made it reasonable for SEPD to replace the defective circuits in their entirety to ensure uninterruptable and reliable connection of power between the PV power station and the substation. It is clear that this was a technical evaluation, and not one which considered either the influence in fact of SSF on the decision making process or a cost-benefit analysis. The limitation of this view is not a criticism of Mr Alyah, a technical expert.[92]The circuits continued to be contractually non-compliant, in that they were achieving low, out of specification sheath test results after the replacement of the ten joints. I have already found that it was reasonable to assume that the type of defects which had been identified in the joints were prevalent. The EA Report’s recommendation was, whilst not definitive, clearly technically supportive of the conclusion that replacement of the circuits should be considered because of the potential safety risks to personnel and the likely continuing degradation of the cable. (It did not extend to a recommendation as to how the circuits should be replaced.) Whilst Mr Smith says that the EA Report was not in fact relied upon, this is not correct. It is right that the immediate response to the report was not to implement the suggested solution, but the position evolved and the existence of this independent party’s contemporaneous views was plainly relied upon, and justifiably so, by SEPD in the ultimate decision. Only replacing the circuits put SEPD back in the position it would have been but for the breach, namely with two properly installed circuits which complied in all material respects with the specification and which minimised to the greatest extent possible future intervention by way of further fault finding, remedial work or indeed later replacement.[93]I have no doubt based upon the expert evidence, therefore, that replacing both circuits (as opposed to a solution in which only some or all of the joints were replaced) was a technical remedial solution in the face of the breaches of the Adoption Agreement established that was reasonably justified. I therefore reject the principal thrust of the Defence which is that it was not reasonably necessary to carry out a whole circuit replacement. F. Causation, Reasonableness, Mitigation and Remoteness

Pleadings

[94]In closing, Mr Zvesper advanced the submission that Modus’ Defence does not explicitly plead a failure to mitigate or a break in the chain of causation and contended that a number of the submissions advanced by Modus are not open to them.[95]As stated in McGregor on Damages 22nd Edn at [52-62], although not stated in terms, CPR r16.5(2) requires a defendant to plead any positive case they may wish to run on causation, mitigation or quantification of damage. In Geest Plc v Lansquot [2002] 1 W.L.R. 3111 at [16], a clinical negligence claim, the Privy Council held that, if a defendant intended to argue that a claimant had failed to act reasonably to mitigate her damages, notice of such intention should have been clearly given. This was described by Lord Bingham as being, ‘appropriate particulars sufficient to alert the Plaintiff to the nature of the company’s case, enable the Plaintiff to direct her evidence to the real areas of dispute…’.[96]Mr Smith, who did not settle the Defence, does not dispute that Modus does not expressly plead a failure to mitigate or a break in the chain of causation, nor plead any positive case as to the cost of such alternatives as are now being advanced as the technical solution(s) which should have been adopted, but were not.[97]At paragraph 17 of the Defence, SEPD is put to proof of the reasonableness of the costs claimed. The paragraph alleges a failure on the part of the Particulars of Claim to have provided any information on various issues which could go to the reasonableness of the decision to replace the works in the method ultimately adopted. This point was reiterated in closing submissions by Mr Smith. This is a fair criticism. The Particulars of Claim, which were not settled by Mr Zvesper, falls short in identifying the real facts, as they have become clear in evidence, which lay behind SEPD’s decision making, which evolved over time to the ultimate decision to replace both circuits in new trenching along a new route, with a financial contribution from a third party in order to keep the existing circuit live. As set out above, it is for the claimant to prove causation, and if it relies upon a decision which it says was reasonable, it is for the claimant to prove its reasonableness. It was for SEPD to plead the facts upon which it relies to prove that reasonableness, and it has not. Mr Smith does not contend Modus has been prejudiced by this, and does not say that it is not open to SEPD to put the case it has in closing; however, he fairly raises this as at least some context through which the inadequacies in his own pleaded case might be viewed.[98]Returning to the Defence, putting the Claimant to proof of reasonableness is not the same as advancing a positive case on a failure to mitigate, although there may be an overlap in the evidence which will be deployed by a claimant to(a) prove reasonableness and(b) rebut an allegation of failure to mitigate. In putting SEPD to proof, Modus raised particular issues which SEPD was required to prove the reasonableness of. The first is the need to replace the circuits at all. At 17.6 of the Defence, Modus also queried the decision to install new ducting. Whilst a little oblique, the latter does put sufficiently into issue, at least in general terms, not just the reasonableness of the technical solution (i.e. replacement of circuits) but the reasonableness of the methodology (i.e. new trench, new route). Whilst somewhat general, it is plain that SEPD understood that as part of the issue of reasonableness enquiry, the decision not to route any replacement in the existing ducting (i.e. Option 2) was being questioned. It is no doubt for this reason that SEPD led evidence on the point, both from their factual witnesses and expert witness. Whilst the same point could and should have been pleaded as a failure to mitigate or a break in the chain of causation to permit the positive assertion, advanced by Mr Smith, that it was unreasonable to act in the way SEPD did, I accept Mr Smith’s argument that in reality SEPD has not been prejudiced in having to meet the case that it was unreasonable to replace the circuits, nor to do so other than by way of in-line replacement.[99]Mr Zvesper’s more focussed pleading point was that Modus’ Defence does not identify the specific solution which, in closing, Mr Smith advanced as the course of conduct which SEPD should have adopted – namely complete joint replacement – as an equally efficacious but cheaper alternative, nor advance a positive case on the quantification of this solution so as to identify that sum it accepted would be reasonable to have incurred, should its primary case that no sum was due failed. In response to this, Mr Smith pointed to paragraph 44 of the Defence in which reference is made to an ‘agreed solution’, without further elaboration. It is argued that it could reasonably be discerned that this was a reference to the January 2017 meeting in which SEPD indicated that it would carry out complete joint replacement. To say this is a rather oblique reference to the case now run by Modus is generous. The Defence did not properly plead joint replacement as the alternative solution which ought to have been adopted pursuant to the duty to mitigate. As a result of this, the evidence as to the cost of that alternative is thin. Had it been properly pleaded, SEPD would no doubt have considered calling evidence on the proper quantification of that alternative scheme, either as part of the liability case (in rebutting the suggestion that it was unreasonable not to adopt the solution) or the quantum case. SEPD has not had the opportunity to engage in the case in that way, and I accept that it is thereby prejudiced. For reasons that are apparent in light of the remainder of this judgment, the point is academic, but had it not been I would have been persuaded that it was not open to Modus to advance the positive failure to mitigate case it has advanced during this trial. The issue of complete joint replacement is not, however, irrelevant. Its potential as a solution remains the context in which the Court must determine whether SEPD has satisfied the burden of proof of reasonableness. For completeness, I would add that even if I am wrong in this analysis as to the scope of the pleaded case, I would, for the reasons given elsewhere in this judgment, have rejected the contention that not carrying out complete joint replacement was a failure to mitigate on the part of SEPD.[100]Finally, I note that I asked Mr Zvesper during Opening Submission whether his case was binary in that SEPD either proved that it was reasonable to replace the cable, in which case SEPD recovered because quantum was not in dispute, or SEPD does not recover. Mr Zvesper agreed that there was no alternative pleaded. However, as both Counsel agreed in closing, my question, at the outset of the case, was overly simplistic. That is because even in circumstances where SEPD has proven that it was reasonable to replace the cable entirely, there remains the question of what the reasonable cost of doing so was, when SEPD have been put to strict proof of doing so. To the extent that I determine that the actual cost is not reasonable, providing there is other evidence upon which I can rationally conclude what a reasonable sum would be, it is plainly open to the Court to award such a sum, even if it differs from the amount claimed, rather than conclude that the answer is ‘nil’.

Summary of Key Facts drawn from Sections D and E

[101]The starting point is that I have found that replacing both circuits (as opposed to doing nothing, or replacing some or all joints) was a technical remedial solution in the face of the breaches of the Adoption Agreement established that was, objectively, reasonable.[102]That is not, however, the end of the enquiry. On the evidence, there were a number of potential ways of achieving this: by reference to the options paper, Options 2, 3, 4 and 5 all involved replacement of two circuits: see paragraphs 56 to 59 above for a discussion of the Options.[103]The further facts of relevance are, in my judgment:(1) Modus was not prepared to carry out or fund any technical solution acceptable to SEPD.(2) Modus also expressed concerns as to its ability to fund, or repay, the cost of carrying out even Option 1 (which was approximately 33% of the Option 2 estimated costs and 25% of those for Option 4);(3) SEPP were entitled to conclude, at least at the time they were making their decisions, that the prospect of recovering any or any substantial sum from Modus was (at the very least) risky;(4) SEPD had a statutory obligation to connect SSF to the grid;(5) carrying out the works in such a way as to require a significant downtime of the existing circuits would cause very significant financial losses to SSF (whether the daily losses are £23,000, £28,000 or £50,000);(6) SEPD had no legal liability to compensate SSF for those financial losses;(7) SSF/Rockfire placed pressure on SEPD to agree a solution which did not involve any significant downtime to the connection, including explaining why there was a ‘large public interest’ in maintaining generation.(8) SSF/Rockfire also offered a financial contribution in order that the remediation take place without causing an outage (subject to that contribution being repaid if any recovery was made in relation to the costs of remediation against any third party).(9) SEPD agreed to carry out the works in the way they did (‘the Adopted Solution’) under an agreement by which SEPD received £700k for doing so. It is not possible, on the evidence, to say for certain whether this contribution was more, less or the same as the then perceived additional cost of carrying out the works in the way requested by SSF. On the basis of figures within the options report spreadsheet, at least, it exceeded the delta between Option 2 (in-line replacement with significant outage) and Options 4 and/or 5. The Remedial Agreement would, on these figures at least, have represented a net contribution to SEPD’s anticipated costs irrespective of the maintenance of the connection during the works.[104]In light of my findings above, the central questions, applying the principles of law I have set out in Section C are:(a) was it reasonable for SEPD to replace the circuits by the Adopted Solution?(b) if it was reasonable, are the actual costs of doing so properly attributable to the defendant’s wrong rather than a consequence of the claimant’s choice?(c) if so, are the actual costs of doing so themselves reasonable?[105]The answer to each of these three questions is, in my judgment: yes. This is for the following reasons:(1) it was objectively reasonable to reject in-line replacement (Option 2) as not being equally technically efficacious, in light of the contemporaneous concerns over ducting. However, in light of SEPD’s own view that this was its preferred method at the time of entering the Remedial Agreement, I approach the remainder of the analysis on the basis that SEPD did not regard the advantages of complete replacement over in-line replacement as sufficient to justify as reasonable the additional costs;(2) it was objectively reasonable to reject any replacement methodology, including in-line replacement, which required personnel to work in close proximity to a live circuit. I accept Mr Alyah’s technical evidence that there were significant risks, which could not be fully mitigated, in carrying out the installation of the replacement circuits in the same or an adjacent trench whilst one or both existing circuits remained live;(3) this conclusion leads to two possible approaches in practice: (1) replacing both circuits, whether in-line or by way of complete replacement in the same or adjacent trenches within the same easement, but in so doing, ensuring that the existing cable was disconnected so it presented no risk. This would mean that, inherent in any of these solutions, there would be a long period during which SEPD would provide no method by which SSF could generate revenue from the solar plant; or (2) replacing both circuits in a different route, which would mean no risk of interference with the existing circuits and which could therefore leave the live circuits in place until the installation of the new circuits was complete i.e. the Adopted Solution;(4) although Mr Phillipps’ evidence was that there were reasons independent of the outage issue which meant that routing the replacement cable in a different route had advantages in terms of landowner relationships/access, I do not accept that this of itself was likely to be a weighty issue in the decision to undertake the Adopted Solution. This is because the importance of these issues is inconsistent with the Agreement with SSF which identified SEPD’s ‘preferred method’ which, I have found, was ‘Option 2’ – i.e in-line replacement;(5) it is plain on the evidence that the motivation for choosing the Adopted Solution was the desire to accede to SSF’s request that the remedial work did not give rise to any or any significant outage. It is clear that a long outage would cause SSF significant losses in revenue. Whilst I take account of the fact that there was no legal liability on SEPD’s part to compensate that loss in revenue, that did not mean that it was unreasonable to accede to SSF’s request, or that so doing did not flow naturally from the requirement to remedy Modus’ breaches. This is because: (a) SEPD’s business is (at least in part) providing infrastructure to solar generation plants allowing them to export electricity and generate revenue. It had a statutory obligation to provide that connection. On any view, SEPD had a legitimate business interest in maintaining that which, by statute and by the Connection Agreement with the SSF, it was (to put it at its lowest) expected to provide. The fact that consequential loss for a failure to provide an effective export mechanism was minimised or excluded does not detract from the wider business and reputational interest in maintaining the connection. Put another way, whilst, as Mr Dickson said, SEPD could have (legally) said ‘tough luck’ without direct pecuniary implications, it does not follow that it is unreasonable, or a failure to mitigate loss, to decide not to do so; (b) pressure was being exerted by SSF on SEPD to keep the connection live during the remedial works by reference to the wider impacts on the local community if electricity generation from the solar farm ceased. In particular, SEPD was being told that, ‘Swindon project is a very public one with some very big public backers that relies on the income we generate each year to in the main assist with the provision of front line services to the residents in their areas, the funds are used in a variety of ways ranging from adult and social care to innovative projects to help people in fuel poverty so in simple terms this is a large public interest project’. There is no suggestion that this was not true. Mr Smith fairly accepted that this was a legitimate factor to consider: it plainly was. The legitimate interest in maintaining the connection in a large public project would be an important consideration in its own right, in addition to the related self-interested reputational issues which SEPD was entitled to take account of. Moreover, SSF had earlier threatened to consult with SEPD’s regulator during the initial period during which the circuits were disconnected, and it is a reasonable inference that they may have done so again had the Remedial Agreement not been reached. It is therefore unsurprising that SEPD felt ‘pressure’ from SSF, as described by Mr Dickson, even if there was no direct financial leverage in the sense of a liability to pay compensation; (c) SSF offered a financial contribution to the solution, in circumstances where on the basis of Modus’ communications, SEPD was entitled to conclude that any recovery against Modus in practical terms was, at best, risky. Acceding to its customer’s wishes, and acting, in circumstances where the customer was willing to finance, subject to recovery, some, all or indeed potentially more than additional costs involved in carrying out the works to keep the ability to generate electricity was objectively reasonable.(6) It is not possible to say with any certainty what the additional cost was for carrying out the works in such a way as to keep the existing circuit alive. The highest it could possibly be put is the delta between the estimate for Option 2 at £1.4m and the outturn costs of the new route at £2.4m, but this is plainly not a safe comparison. A closer, but definitely not an entirely satisfactory guide, is the difference between £1.4m and Option 4 (£1.9m) i.e. about £500,000. It may have been lower. The burden is on Modus to prove the failure to mitigate, and to do so it is for Modus to establish how much cheaper it may have been to carry out the work in the way they contend SEPD should have: they have not done so. However, putting the burden of proof to one side, when weighed against the very legitimate interest in minimising as far as possible any downtime to the connection to the solar park, I conclude that whether the additional cost was £500,000 or £1m, the Adopted Solution was objectively reasonable;(7) in circumstances where, by reason of Modus’ defective work, it was reasonably necessary to replace the circuit, it was readily foreseeable that, SEPD would seek to carry out repairs without, insofar as they reasonably could, interrupting the existing connection to their customer. The decision to carry out the remedial works in this way was both reasonable, and caused in law by the underlying breaches and defective circuits;(8) there is no evidence that the actual cost of carrying out the work was itself unreasonable, once it has been determined that the decision to replace the circuits was reasonable, and the decision to use the Adopted Solution was reasonable.[106]In the circumstances, SEPD’s claim succeeds in the claimed sum of £2,642,237.71. I will hear from the parties in relation to interest as part of the consequentials.