Electro-shock blues

It is never a good idea to take your neighbours for granted, particularly if you want to redevelop your property. A developer intending to buy land must think hard about what rights it may need, now and in the future, over any land retained by the seller (commonly known as easements).

For example, a developer may want the ability to use existing services that run under the retained land, including a right to lay new services when the land is redeveloped. The rights granted will usually be for the benefit of the developer and those authorised by it, such as utility providers.

But what happens if the utility provider refuses to rely on the developer’s rights or insists on entering into a direct agreement with the owner of the retained land? This was the subject of a in William Old International vs Arya, a High Court case that showed up the shortcomings in the rights developers normally take when acquiring land.

Developer William Old had been given a right to lay services across adjoining land owned by Arya. The right benefited successors in title and had all the other hallmarks of a proper legal easement. The right did not specify a precise route across Arya’s land, but it is accepted law that an easement must be exercised reasonably, without undue interference to the owner. The route was not, in any event, the difficulty. When William Old asked the electricity provider, EDF, to provide a supply that would involve laying cables under Arya’s land, EDF insisted it must first have Arya’s consent.

There was no legal need for Arya to give its consent to EDF, as the right in favour of William Old was broad enough to allow not just William Old but also EDF to lay the cables. EDF, however, wanted Arya to enter into a wayleave (giving rights for EDF to install and retain their apparatus) direct with EDF. Why? Because EDF wanted a direct right of access to its cables and a direct remedy against Arya if something went wrong.

Unfortunately for William Old, however, Arya was not prepared to play ball; EDF would not lay the cables without Arya’s consent, and Arya was not prepared to give its consent. This was serious for William Old, as the only other route available would involve paying another neighbour £90,000 for an alternative site.

EDF would not lay the cables without Arya’s consent, and Arya was not prepared to give consent

William Old unsuccessfully sued Arya. The judge took the view that the right to lay services across Arya’s land was just that. No ancillary right could be implied by which Arya was required to enter into a wayleave with EDF.

Had the complaint been that Arya was preventing William Old from laying the cables, a “derogation from grant” would have been established, but that was not the case here. Arya was prepared to allow EDF to lay the cables; it was just not prepared to enter into a direct arrangement with it.

So what can a developer do when an energy company with a statutory monopoly insists on a level of protection that the adjoining landowner is not obliged to give? One possibility might be to report the company to the regulator, Ofgem, for abuse of its monopoly position. A less severe option might be to seek a statutory wayleave. This means that where a landowner refuses to sign up, the energy company applies to the secretary of state for a compulsory wayleave. But this takes time and requires compensation, and where is the incentive for the energy company to do this?

Until now, energy companies have rarely insisted on direct rights against the adjoining landowner but this case may encourage others to do so, which will add to developers’ problems.

The potential for delay to the construction of a development is obvious. It is not so clear who shoulders the risk of any delay if the building contract has been signed before the issue arises. Under a JCT contract, the contractor is only entitled to an extension of time for delay caused by a utility in carrying out work under its statutory obligations, which may not include making a connection in these circumstances.

Another ground for extension of time is where the contractor is impeded by the employer or others engaged by the employer. However, the JCT wording specifically excludes utilities from this. Perhaps developers and contractors need to review how they deal with the risk of this situation arising?