The Court of Appeal has resolved a dispute between British Telecom and Gwynedd County Council over a £600 bill.
The invoice was among the costs submitted to the council by BT after it was forced to move telephone equipment in order to allow roadworks to be carried out.
Although Gwynedd Council accepted that they had a statutory duty to pay 82% of BT’s allowable costs in moving the apparatus, they refused to pay for the preparation of the budget estimate for the proposed operation.
The Court of Appeal has backed a decision by Manchester County Court, holding that “allowable costs” could include not only the actual works carried out but also those costs incurred in planning the works.
Despite the size of the bill, described by the county court judge as “the princely sum of £684.14”, the Appeal Court recognised that the ruling is “of considerable importance” to other highway authorities and utilities.
BT itself presented evidence that, annually, it receives around 35,000 notices requiring budget estimates for necessary works, each of which take between four and 16 hours to deal with.
According to the judgment, Gwynedd Council wrote to BT in July 2001, requesting preliminary budget estimates for the diversion of BT’s equipment. The action was necessary to allow works to be undertaken on the Pont Llafar, Llafar cattle creep and Pont Llanfor bridges on the A494 near Bala.
Under the New Roads and Street Works Act 1991 and the Street Works (Sharing of Costs of Works) Regulations 1992, BT was entitled to charge the council for 82% of the allowable costs incurred in executing the necessary measures. The company could not recoup costs incurred “in preparing the initial set of plans and estimates” but it could charge for “further plans and estimates”.
BT acknowledged that it could not bill the council for preliminary inquiries or draft scheme and budget estimates. However, following its submission of a more detailed estimate, it billed the council for the costs of preparation.
Judge Holman, sitting in the county court, allowed the claim. He held that although the preparation of a detailed estimate might not be the end of the process, it could not properly be characterised as “initial”.
The Appeal Court has agreed, stating that “allowable costs” cannot “relate only to the costs of the execution of the physical work required to move or to otherwise protect the undertaker’s apparatus”.
Wall LJ said: “The phrase ‘all the reasonable costs of the measures’ is not limited to the cost of the physical execution of the measures.
“Self-evidently, measures designed to protect the equipment of an undertaker do not materialise out of thin air, or spring fully armed from the head of the undertaker’s engineer. They have to be planned.”
He maintained that BT’s detailed estimates, which were prepared after preliminary inquiries and draft estimates had been submitted, constituted “further plans and estimates”, and were an allowable cost under the regulations.
British Telecommunications plc v Gwynedd County Council Court of Appeal (Auld, Jacob and Wall LJJ) 16 July 2004.
Ian Mayes QC and Niran de Silva (instructed by the solicitor to British Telecommunications Group) appeared for the claimant; Stephen Sauvain QC and Ruth Stockley (instructed by the solicitor to Gwynedd Council) appeared for the defendants.
References: EGi Legal News 16/7/04
