Sewerage undertakers cannot refuse a connection request even if there is insufficient capacity. David Shakesby and Neil Bromwich consider the implications of a Supreme Court ruling
The Supreme Court recently handed down judgment in Barratt Homes Ltd v Dwr Cymru Cyfyngedig (Welsh Water) [2009] UKSC 13; [2009] 50 EG 67 (CS): see box. The case considered whether a developer was entitled to connect to a public sewer even if there was no capacity, or insufficient capacity, in the sewerage system.
The court held that a lack of capacity was not a valid reason for a sewerage undertaker to refuse a connection request under section 106 of the Water Industry Act 1991. It further concluded that the risk of flooding or pollution from sewers was irrelevant to a decision on connection.
This was the first occasion since the Public Health Act 1875 (which introduced a similar regime for local health boards to permit connections to their sewers) on which the courts have been asked to determine a dispute between an undertaker and a developer.
However, Barratt was not the first such dispute. Ofwat dealt with a disagreement between the Post Office and Yorkshire Water on 11 August 1997, and in November 2009, as Barratt was on its way to the Supreme Court, it was determining a similar dispute between the Ministry of Justice (MoJ) and Thames Water Utilities Ltd.
From these rulings, it appears that undertakers have for some time attempted to persuade developers to pay for improvements to sewers or have required them to alter or delay their plans. Developers rarely challenge undertakers, even though, in August 1997, Ofwat made its position clear. Thames Water and Welsh Water repeated the arguments made in 1997 by Yorkshire Water, and both lost.
Barratt leaves undertakers in no doubt that they cannot refuse a connection request under section 106, except for very limited technical reasons. This means that undertakers will have to agree to connections even where flooding or pollution may result.
The Supreme Court suggested that such issues and their consequences can and should be resolved earlier, during the planning process.
Planning aspects
The planning element was first raised by the Court of Appeal.
It suggested that a planning authority has the power, which the undertaker lacks, to control the timing of a development by imposing a Grampian condition: see Grampian Regional Council v Secretary of State for Scotland (1983) 271 EG 625. Such a condition could be phrased to ensure that the undertaker has upgraded the sewerage system to provide additional capacity before the occupation of the site. A planning condition was imposed in Barratt, but it dealt only with the details of the connection and not the capacity of the undertaker’s system or any potential environmental effects.
The Supreme Court recognised that a reliance on the planning system causes difficulties. It imposes a responsibility on planning authorities to decide: whether it is reasonable to expect undertakers to upgrade their systems to accommodate the proposed development regardless of cost the reasonableness of undertakers’ timetables for improvement works and whether it is proper to delay such works in the hope that the developer will offer to fund them. This suggests that the planning authority should exercise a wider role, rather than merely considering material planning considerations.
The Supreme Court identified a need to improve the interaction between planning and water regulation. Undertakers are not statutory consultees, although this is likely to change following the government’s response to the Killian Pretty review. However, responding to applications at the submission stage will be unsatisfactory if undertakers object on the basis of insufficient capacity.
In Barratt, Welsh Water had been consulted on the allocation of the development in the unitary development plan (UDP) and during the planning application, and had objected because of a lack of capacity. The planning authority, however, appeared to conclude that a condition relating to the technical specifications of the drains serving the development, rather than capacity, was appropriate.
Regulatory framework and Ofwat
In parallel to the planning considerations discussed above, the undertaker’s duty to develop its system of sewers is set out in section 94(1) of the Act:
“(1) It shall be the duty of every sewerage undertaker –
(a) to provide, improve and extend such a system of public sewers and so to cleanse and maintain those sewers as to ensure that that area is and continues to be effectually drained.”
This duty requires an undertaker to ensure that its system of foul drainage is adequate, properly maintained and appropriate for future needs. Undertakers are therefore required to take account of development proposals and to provide the requisite systems.
It does not require an undertaker to provide for an unanticipated development or to deliver improvements to suit a developer’s timetable. It does, though, suggest that the undertaker has to supply suitable drainage for developments that have been promoted in the proper manner.
Ofwat sets the spending and investment budgets for undertakers every five years this limits their ability to respond in the middle of a cycle. In Barratt, the development proposals in the UDP and during the application process spanned two budget cycles and the dispute extended into a third. On a simple analysis, Welsh Water could and, arguably, should have resolved the capacity issues by the time Barratt served its section 106 notice. This view is strengthened by the Ofwat decisions.
In its decision in the dispute between the Post Office and Yorkshire Water, Ofwat ruled that a lack of capacity alone could not constitute grounds to refuse a connection under section 106. It was noted that the Post Office had proposed to develop the site for some years – outline planning permission had been granted in 1991. Detailed drainage proposals were made in October 1996, with connection no earlier than February 1998.
Ofwat concluded that this was sufficient time to enable Yorkshire Water to deal with the surface water drainage from the site. It suggested that Yorkshire Water would be in breach of its section 94 obligations if it did not provide an adequate system, and it therefore had to do so at its own cost.
Following that decision, Ofwat wrote to all undertakers, in November 1997, stating that “if the company has had warning of a development and ought reasonably to have foreseen a likely connection (for example, if it is included in the local structure plan), but fails to act, then a deferment condition is unlikely to be defensible. In this context, the companies’ duty under section 94 of the Act is to provide, improve and extend the system of public sewers so as to ensure that the area is effectually drained.”
Ofwat again set out the interrelationship between section 106 requests and the duty under section 94 in its decision in the dispute between the MoJ and Thames Water. The decision was made after the Court of Appeal gave judgment in Barratt, but before the appeal to the Supreme Court.
The MoJ asserted a breach of the section 94 duty. Ofwat concluded that there was insufficient information to determine the issue. It did, however, conclude that Thames Water had had notice of the proposed connection in 2005 and had received detailed proposals in February 2006.
The decision suggests that there was at least a potential breach of the section 94 duty. Ofwat went on to hold that Thames Water could not refuse the connection because its objections all related to capacity.
Conclusion
The Supreme Court’s suggestion that the planning system is the solution to the problems facing undertakers as a result of section 106, and in particular that the solution could be a Grampian condition, is theoretically correct. However, as can be seen from the analysis above, it is not the complete answer. A Grampian condition aimed at postponing development until a sewerage system is improved might be appropriate. However, such a condition has to be balanced against the developer’s right to seek a remedy against an undertaker for a breach of section 94.
Developers will therefore pressurise planning authorities to disregard an undertaker’s capacity objections in cases of delay or when there is no good reason why sewers have yet to be upgraded. They may also now feel confident to apply to Ofwat for enforcement orders to ensure that undertakers comply with section 94. They must allow reasonable time for undertakers to budget for and implement improvements and should therefore ensure that their development proposals are communicated in sufficient time to allow this to happen. Undertakers, for their part, would be well advised not to ignore the effect of proposed development on their sewerage networks.
Barratt Homes Ltd v Dwr Cymru Cyfyngedig |
Facts: Barratt intended to develop a site in Llanfoist, near Abergavenny, by building approximately 100 houses and a new primary school. Barratt promoted the site through the unitary development plan and subsequently obtained planning permission. It exercised the right of a property owner to connect to a public sewer under section 106 of the Water Industry Act 1991. Welsh Water, the statutory undertaker, opposed the sewerage connection at Barratt’s chosen point and insisted that the connection be made 300m further away from the site. This would have caused Barratt significant further expense. However, Welsh Water argued that there was insufficient capacity at the point chosen by Barratt for the connection, and connecting to it would give rise to flooding. Decision: The Supreme Court found that: ? the right of a property owner to discharge into a public sewer under section 106 was an absolute right that could not be denied on the ground that it might cause a nuisance ? the right to object to the “mode of construction” in section 106 did not extend to the point of connection ? the 21-day time limit in which an undertaker could respond to a section 106 notice was absolute, and if missed meant that the undertaker lost the right to object ? the real problem was not that the developer had an absolute right to connect, but that it had the right to do so on the giving of only 21 days’ notice. The Supreme Court suggested a need for better interaction between water regulations, Ofwat and the planning system to ensure that large developments were the subject of adequate planning. |
David Shakesby is a litigation associate and Neil Bromwich is a planning associate at Osborne Clarke
