UTILITIES, WAYLEAVES AND COMPENSATION

ROBERT FOOKES



1. There are variants on compulsory acquisition available to the utilities. Originally
provided for public statutory authorities these variants have survived for certain new
private statutory undertakers. These statutory powers enable a company to exercise a
power to enter and use land or an interest in land without acquiring the title to that
land. Some require compensation to be paid and others do not.

2. These powers will remain topical not only in the emerging solutions to our energy
shortages but also because of the conflict between development and lost or
unrecorded underground services.

3. Notwithstanding the existence of such powers, outright compulsory purchase of land
remains as an alternative option for the utility: more cumbersome to achieve but more
certain in the long term. It is not always clear which is the cheaper option or why one
is being used in preference to another.

4. What are the purposes for which these variant CPOs exist?

Electricity lines (wires and cables)
Telephone lines
Water and Sewerage
Gas
Pipelines

This paper considers what these powers are and then some recent developments in
case law applicable to these variant CPOs for utilities:

Compulsory purchase or wayleave?
Implications of Miller Homes Ltd v Yorkshire Electricity Distribution
Limited (2009) unreported;
Compensation in the light of Welford v EDF Energy Networks (LPN) Ltd.
[2007] EWCA Civ 293 (on appeal from LCA/30/2004).

The powers
5. The powers of the utility to use land for their purposes are as follows:
5.1 Electric lines
5.1.1 Electric lines are defined in s.64 of the Electricity Act 1989 as:
any line which is used for carrying electricity for any purpose and
includes, unless the context otherwise requires
(a) any support for any such line, that is to say, any structure, pole or
other thing in, on, by or from which any such line is or may be
supported, carried or suspended;


(b) any apparatus connected to any such line for the purpose of carrying
electricity; and
(c) any wire, cable, tube, pipe or other similar thing (including its
casing or coating) which surrounds or supports, or is supported by,
or is installed in close proximity to, or is supported, carried or
suspended in association with, any such line.
5.1.2 The right to place electric lines on, under or over any land, together with
ancillary trenches, poles or pylons
1
, may be voluntary, implied or statutory. They
may be granted by licence; temporary easement; permanent easement; interest in
land or creation of new rights under or over land.
5.1.3 To confuse matters, such rights are often referred to as wayleaves. It is entirely
unclear what a wayleave is. An early mention, following on from Durham Court rolls
of the C15th, of a wayleave is to be found in Dand v Kingscote (1840) 6 M&W 174. A
C17
th
deed of land at Amble in Northumberland reserved the right of the grantor of:
all mines of coal within fields and territories of Amble together with
sufficient wayleave and stayleave to and from the said mines and the
liberty of sinking and digging such pit and pits.
The owner subject to the burden of this reservation argued that:
The term stayleave, according to the custom and the understanding of
miners and other persons conversant with coal mines, means a right in
the coal-owner of having a station where he may deposit his coals for
the purposes of dispensing them to the purchaser. Wayleave is the
privilege of crossing land for the supply of coals to the purchaser. This
privilege is generally the subject of detailed contracts, specifying the
particular direction and extent of the wayleave, and there is no usage of
or understanding amongst persons conversant with coal-mines, by
which to interpret the extent of the privilege, when conferred in general
terms used in the deeds
The term wayleave is used to describe a right of way over the surface,
which shall leave the owner the full enjoyment of the soil, subject only
to that easement.
The Court held that this meant:
a right to such a description of wayleave, and in such a direction as
will be reasonably sufficient to enable the coal-owner to get, from time
to time, all the seams of coal to a reasonable profit; and therefore the
owner is not confined to such description of way as is in use at the time
of the grant, and in such direction as is then convenient. (p.198)
5.1.4 Voluntary wayleaves are contractual and not statutory agreements entered into
by the utility and the land-owner or occupier whereby a contractual licence is granted.
The terms may be agreed individually or by a standardised agreement and should be in
writing.
5.1.5 Implied wayleaves are those deemed to have arisen by implication from the
conduct of the utility and the land-owner/occupier. As a wayleave is a licence it does
not run with the land and automatically lapses on change of land-owner. The successor

1
Ancillary items are vital and were accepted in CEGB v Jennaway [1959] 1 WLR 937. That decision does not
appear to be consistent with later authority: Sovmots Investments v Sec. of State for the Environment [1979] AC
144. The problem being that the right given is a right of occupation and not an interest in land Newcastle-
under-Lyme Corp. v Wolstanton Ltd. [1947] Ch. 427 at 456-7; and that any expropriatory orders should not
carry ancillary rights unless expressly mentioned.


will not be bound by any previous written licence but may be taken to have a new
contractual licence implied from conduct or course of dealings such as acceptance of
payments. Similarly, where a fixed term wayleave expires but the line is not removed
a new wayleave may be implied form the continuation of the same course of dealings.
5.1.6 Statutory wayleaves are known as necessary wayleaves and arise under the
provisions of Schedule 4 to the Electricity Act 1989. At the end of a voluntary or
implied wayleave (i.e. on death of the original land-owner/occupier or transfer of land
between companies or trusts) the land-owning successor may give the utility notice to
remove its wires and ancillary infrastructure. The electricity licence holder must then
apply for a necessary wayleave within three months under paragraph 8:
8(1) This paragraph applies where at any time [a necessary wayleave]


(a) is determined by the expiration of a period specified in the
wayleave;

(b) is terminated by the owner or occupier of the land in
accordance with a term contained in the wayleave

(c) by reason of a change in the ownership or occupation of
the land after the granting of the wayleave, ceases to be
binding on the owner or occupier of the land.

(2) The owner or occupier of the land may

(a) in a case falling within paragraph (a) of sub-paragraph (1)
above, at any time after or within three months before the
end of the period specified in the wayleave;.
(b) in a case falling within paragraph (b) of that sub-
paragraph, at any time after the wayleave has been
terminated by him; or

(c) in a case falling within paragraph (c) of that sub-
paragraph,.at any time after becoming the owner or
occupier of the land by virtue of such a change in the
ownership or occupation of the land as is mentioned in
that paragraph,

give to the licence holder a notice requiring him to remove the
electric line from the land; but the licence holder shall not be
obliged to comply with such a notice except in the circumstances
and to the extent provided by the following provisions of this
paragraph.

(3) Where within the period of three months beginning with the date
of the notice under sub-paragraph (2) above the licence holder
makes neither

(a) an application for the grant of the necessary wayleave
under paragraph 6 above; nor



(b) an order authorising the compulsory purchase of the land
made by virtue of paragraph 1 of Schedule 3 to this Act,

the licence holder shall comply with the notice at the end of that
period.

5.1.7 If the electricity licence holder wishes to continue to occupy the land it must make an
application under paragraph 6 for a necessary wayleave within three months from the
date of the notice. If such an application is made, then the licence will continue until
the application is determined and thereafter if the decision is to grant the necessary
wayleave. If no notice is served, continued presence of the wires after the three
months will constitute a trespass and damages may accrue thereafter.

5.1.8 Where a necessary wayleave is granted there is provision for compensation:
7(1) Where a wayleave is granted to a licence holder under
paragraph 6 above
(a) the occupier of the land; and
(b) where the occupier is not also the owner of the land, the owner,
may recover from the licence holder compensation in respect of
the grant.
That compensation may be recovered as a lump sum or periodic payment and is for
damage to land or moveables and disturbance of their enjoyment. Any dispute is
referable to the Lands Tribunal and ss. 2 and 4 of the Land Compensation Act 1961
will apply. (Sub-paragraphs 7(2) (3) and (4)).
5.1.9 The test for the grant of a necessary wayleave is whether it is necessary or
expedient for the electricity licence holder to instal and keep installed an electric line
on, under or over any land. Procedural and Legal Guidance for Applicants and
Landowners and/or Occupiers was produced in September 2002 by the Secretary of
State for Trade and Industry (now Business Enterprise and Regulatory Reform) for
what they call (compulsory) wayleaves. This guidance applies, at para. 4.14, a second,
non-statutory test of what the effects are of the electric line on the use and enjoyment
of the land in question.
Purpose and scope of the necessary wayleave hearing

4.14 The purpose of a necessary wayleave hearing is to hear evidence
as to:

(i) why it is necessary or expedient for the electric line to
cross the particular land in question; and

(ii) what the effects are of the electric line on the use and
enjoyment of the land in question.

4.15 In scope, a necessary wayleave hearing is focused more on
establishing the effect on private land interests, rather than matters of a
more general planning nature that would be canvassed at a public
inquiry. Accordingly, there is no right for third parties to appear and
evidence may, at the request of the electricity company or owner and/or


occupier, be given in private. Thus, evidence that will be relevant at a
necessary wayleave hearing is site specific, for example, the effect of
the electric line in question on farming (crops and animals), on the use
of machinery, on wild fauna and flora and, in the case of an overhead
line, on the outlook from buildings situated on the land in question.
Other relevant evidence is likely to be the cost of any suggestions for
local diversions of the application route (typically up to a maximum of
500 metres either side of the existing/proposed route) and, in the case of
an overhead line, the location of supports on the land in question.

4.16 Matters of a more general nature, such as the overall case for a
new electric line and planning considerations that are not site-specific,
such as alternative routes (beyond the 500 metres zone), will not
normally be treated as appropriate for detailed discussion at the
necessary wayleave hearing by the Inspector. Such matters are more
properly considered at the separate section 37 (of the 1989 Act)
development consent application stage, where local planning authorities
and all those affected by a proposed electric line can make
representations to the Secretary of State.

Hearings are governed by the Electricity (Compulsory Wayleaves) (Hearings
Procedure) Rules 1967 SI No. 450. The Guidance emphasises that the hearings are
private and that there are no rights of audience for third parties and that there is no
power to award costs.

5.1.10 Powers exist which authorise an electricity-licence holder to compulsorily
acquire any land which is required for any purpose connected with the carrying on of
the activities authorised by its licence (section 10 and Schedule 3 of the Electricity
Act 1989). Land includes any right over land and the power to acquire includes the
power to create new rights as well as acquiring existing rights. The powers are wide
enough to include wayleaves, licences and easements as well as the ground itself.
5.1.11 Part II of Schedule 3 refers questions of compensation to the Lands Tribunal.
5.1.12 There is some evidence that the Department considers that a CPO can only be sought
as a last resort after failure to obtain a voluntary or necessary wayleave. There is no
basis for such an approach in the statute or in the practice adopted by electricity
licence holders, provided that the land is required for the applicants authorised
activities. It was established in Sharkey v Secretary of State for the Environment
(1991) 63 P&CR 332 that when assessing whether land is required:
the local authority do not have to go as far as to show that the
compulsory purchase is indispensable to the carrying out of the activity
or the achieving of the purpose: or, to use another similar expression,
that it is essential. On the other hand, I do not find the word desirable
satisfactory, because it could be mistaken for convenient, which
clearly, in my judgment, is not sufficient. I believe the word required
here means necessary in the circumstances of the case. [at p.340].
ODPM Circular 06/04 provides at paragraph 17 that:
A compulsory purchase order should only be made where there is a
compelling case in the public interest.
That test would also apply to a CPO under the Electricity Act 1989.



5.2 Telephone lines etc.
5.2.1 The Telecommunications Act 1984 section 10 and Schedule 2 provided a
Telecommunications Code. That Schedule is incorporated within the Communications
Act 2003 by section 106 as the Electronic Communications Code and with some
amendments set out in Sch. 3 to the 2003 Act. The Code contains provisions for
obtaining what are in effect compulsory agreements or variant CPOs.


5.2.2 The Code provides for:
i) agreements conferring rights to execute works on land for or in
connection with the installation, maintenance, adjustment, repair or alteration
of electronic communications apparatus; or to keep such apparatus installed on,
under or over that land; or to enter and inspect any apparatus, to be obtained in
writing from the occupier of the land;
ii) the owner or lessee who is not the occupier is not to be bound generally
by an agreement entered into by the occupier unless also a signatory;
iii) the rights to be exercisable only in accordance with the written
agreement;
iv) the rights obtained are not registerable land charges or interests;
v) the agreement will contain the terms which will be deemed to be done
in the exercise of statutory powers.
5.2.3 The Code restricts the ability of an owner or lessee entitled to call for the
removal of the apparatus to do so. Para. 21 requires him to give notice. If the
undertaker serves a counter-notice then removal can only be enforced under a court
order. The court will examine what steps the undertaker is taking to secure the rights
previously enjoyed and the timetable for obtaining such rights. As a result of this
restriction on removal, compensation for any depreciation that para. 21 causes to the
value of the land is payable to the owner or lessee at the time the right is conferred
(para. 4(4)). Disputes as to entitlement or amount of compensation are referable to the
Lands Tribunal (para. 4(6)). Detailed provisions are set out for the assessment of
compensation in para. 4 (7)-(10).
5.2.4 Where the undertaker requires any person to agree that any right should be
conferred on him (para. 5) or retained (para. 6), he may give notice of the right and of
the agreement that he requires. When 28 days has elapsed without the recipient
entering into the required agreement the undertaker may apply for a court order
conferring the proposed right. The Court will need to be satisfied that any prejudice is
capable of being compensated for by money and that the benefit secured to the
undertaker outweighs that prejudice. The application may be made by the undertaker
to a County Court. The Court fixes the compensation payable on such terms as appear
to be fair and reasonable if the agreement had been given willingly (para. 7). In
Mercury Communications Ltd v London & India Dock Investments Ltd [1994] EGLR
229 the County Court held that this involves an element of subjective judgment; that
compulsory purchase principles (including Pointe Gourde) were not applicable; that a
ransom value approach was inappropriate; and that industry agreed formulae for
agricultural land were of no assistance to urban land and did not represent the
bargaining power of grantors. The Court used evidence from two comparable
agreements.
5.2.5 The Code also provides a power to fly lines (para. 10). Where apparatus
(including supports and lines) is kept installed on land, the undertaker has the right to
install and keep installed lines which:


i) pass over other land adjacent to or within the vicinity of the
land on which the apparatus is kept;
ii) are connected to that apparatus; and
iii) are more that 3m above the land and are more than 2 m from
any building on the land over which they are to pass.
iv) do not require any apparatus to support them on the land over
which they are to pass;
v) do not interfere with any business on the land over which they
are to pass.
Provision is made for objection to the Court and for obtaining compensation for
injurious affection, as if under s.10 of the Compulsory Purchase Act 1965, by paras.
16 and 17.
5.2.6 The Communications Act 2003, section 118 and Sch. 4, para. 3(3) give an
undertaker powers of compulsory acquisition of land, or of an easement or other right
over land by the creation of a new right. The test is that the interest be required:
(i) for or in connection with the establishment or running of the
operators network; or
(ii) as to which it can reasonably be foreseen that it will be so
required.
In contrast to the legislation applicable to other utilities and to the provisions of
the Code, the Act does not provide any express compensation provisions to be applied
upon confirmation of a CPO. Accordingly, section 1 of the Land Compensation Act
1961 refers the determination to the Lands Tribunal for determination on normal
compulsory purchase principles.

5.3 Water and Sewerage
5.3.1 Under the Water Resources Act 1991 the Environment Agency may lay
resource mains or discharge pipes above and below the surface of any street (WRA
s.159) or of any land that is not a street (WRA s.160) and may keep its main or pipe
there; carry out works to inspect, maintain, adjust, repair or alter them; and carry out
any further works requisite for or incidental to the purposes of any of those pipes or
works.
5.3.2 Under the Water Industry Act 1991 a water undertaker may lay:
i) water mains; resource mains; or discharge pipes; and
ii) service pipes but only where there already is a service pipe
where the new pipe is to be laid or where required to lay a service pipe
to make a domestic connection under s.46;
and a sewerage authority may lay:
i) any sewer or disposal main; or
ii) various lateral drains
above and below the surface of any street (WIA s.158) or of any land that is not a
street (WIA s.159) and may keep its pipes there; carry out works to inspect, maintain,
adjust, repair or alter them; and carry out any further works requisite for or incidental
to the purposes of any of those pipes or works.
5.3.3 WRC Section 177 and Schedule 21 and WIA Section 180 and Schedule 12
provide for compensation for the exercise by the undertakers of their powers to enter
and lay relevant pipes under sections 159 to 167 of the WRC Act 1991 and 158 and
159 of the WIA 1991 Act:


- For pipes in streets the obligation is to do as little damage as possible
and to pay for any loss or damage done with disagreements being referred to
arbitration (WRC Sch. 21 para. 1 and WIA Sch.12, para.1).
- For pipes under other land compensation is to be paid for the value of
any depreciation to the interest in land; for any additional damage and
disturbance from the works; and for any injurious affection of any other land
(WRC Sch. 21 para. 2 and WIA Sch.12, para. 2). Any question of disputed
compensation is referable to the Lands Tribunal (WRC Sch.21, para.3 and
WIA Sch. 12, para. 3).
5.3.4 Both the Environment Agency and the Water and Sewerage undertakers also
have powers of compulsory purchase of any land or new interests or rights to be
created over land (or extinguishment of existing rights or interests) which are required
for the purposes of or in connection with the carrying out of their functions (s. 154
Water Resources Act 1991 and s.155 Water Industry Act 1991 respectively). Under
both Acts and in each case questions of compensation are referable to the Lands
Tribunal.
5.3.5 In addition the EA and each undertaker has powers to obtain compulsory
works orders under WRC s.168 and Sch.19 and WIA s.167 and Sch.11.

5.4 Gas
5.4.1 There is no variant CPO power for a Gas utility. The choice is either a
voluntary agreement or a full CPO.
5.4.2 The Gas Act 1995 incorporates the Gas Act 1986. Section 9(3) and Schedule 3
of the 1986 Act provide for the compulsory acquisition of any land or of any right
over any such land or other land for the purposes of developing and maintaining:
i) an efficient and economical pipe-line system for the conveyance
of gas; and, on request, to connect to that system:
ii) (a) another pipe-line system operated by an authorised transporter or
(b) a system to convey gas to any premises.
5.4.3 There is no specific guidance as to the determination or quantification of
compensation. Section 1 of the Lands Compensation Act 1961 applies.

5.5 Pipelines
5.5.1 The Pipe-lines Act 1972 introduces yet another variant CPO known as a compulsory
rights order. Under Section 12 the Secretary of State may make an order permitting a
person to execute works for the placing in land of a pipe-line; for the use of that pipe-
line; and for any other necessary works. The order may be conditional and may
contain such ancillary rights as are listed in Sch. 4. The order enures for the benefit of
the pipe-line owner but may be revoked by the Secretary of State.

5.5.2 Schedule 2, Part I, as modified by Part II, sets out the procedure for confirmation of a
compulsory rights order. Compensation is payable for depreciation and damage (s.14)
but the determination of disputes is not specified. Despite the distinction between a
Compulsory Purchase Order and a Compulsory Rights Order in the Act, it is arguable
that both fall within s.1 of the Land Compensation Act 1961.

5.5.3 A significant constraint on a compulsory right order is that it requires confirmation by
special parliamentary procedure (s.12(7).



5.5.4 Section 11 and Schedule 2, Part 1 provide for the compulsory acquisition of land for a
pipe-line. It too is subject to special parliamentary procedure. Section 1 of the Land
Compensation Act 1961 applies and compensation is determinable by the Lands
Tribunal subject to the 1972 Act, Third Schedule.

Compulsory purchase or wayleave?
6. The question might refer to either:

i) why is there such confused nomenclature over the variant CPOs? or
ii) which route is preferable?

6.1 The nomenclature is difficult. Only electricity rights seem to be referred to regularly
as wayleaves despite the minerals origin of that term. The almost total duplication of a
CPO by a CRO (compulsory rights order) in the Pipe-lines Act 1962 probably owes its
origin to the fact that it pre-dated the introduction of other powers to acquire new
rights.

6.1.1 It might be arguable that there is no need for anything other than a CPO now that new
rights can be acquired. No rational explanation has been discovered during reviews of
the legislation for the variation between the CPO variants. There can be no reason for
not adopting a uniform approach with one body determining compensation on a
standard basis.

6.1.2 At the very least, the hypocrisy of the compulsory agreement for tele-
communications, seems deliberately misleading.

6.2 The first and most obvious case where a CPO is to be preferred is where the necessary
wayleave application relates to a new electric line on or over (but not under) land
where a dwelling already covers that land or where valid planning permission exists
for a dwelling to be constructed. The Secretary of State is precluded by legislation
from granting a necessary wayleave in such circumstances unless the new line is to be
placed underground (see paragraph 6(4) of Schedule 4 to the Electricity Act 1989).
The same constraint does not apply where the application for the grant of a necessary
wayleave relates to an existing electric line. This interpretation has been upheld by the
High Court (see R v Secretary of State for Trade and Industry, ex parte Wolf (2000) 79
P&CR 299).

6.2.1 The most obvious case where rights are sought rather than a CPO concerns sewerage
and water undertakers who may CPO land for treatment works but use their parallel
powers under the 1991 WIA Act for the pipes linking into those works. There is no
incentive for them to engage in the costly and uncertain procedures of the CPO when,
unlike electricity wayleaves, the rights obtained under the statute are automatically
granted, with only 3 months notice being required to be given for a new pipe or 2
months for an alteration and the rights are not time-limited or determinable.

6.2.2 It is unclear why water, sewerage and communications undertakers have greater
powers than electricity undertakers; or why Gas transporters have no alternative to a
CPO. Nor is there any obvious reason why pipe-lines undertakings are subject to
special parliamentary procedures when, normally, no other undertaking has a similar
constraint.



6.3 The rights acquired also differ. Easements are perpetual and wayleaves are terminable.
However, it is often unclear whether an easement can actually be obtained since the
dominant tenement, which must be benefited, is unclear or remote. For example, in
Swindon Waterworks Company Ltd v the Proprietors of the Wiltshire and Berkshire
Canal Navigation Company (1875) LR 7 HL 697 at p.705 it was said that the use of
land for the purpose of abstracting water which is to be supplied to consumers
elsewhere is not for the sake of the (dominant) tenement where the abstraction occurs
but so that the owner of that tenement may make gains by alienating the water to other
parties who have no connection whatever with any part of the stream. In Stockport
Water Company v Potter (1864) 3 H&C 300 it was said that if waterworks could be
considered a dominant tenement every house in Stockport to which the water flowed
through the pipes might equally be so. These old cases might be past their sell-by date
2

and could be said not to be relevant to the current world but it has been questioned
more recently whether there is a dominant tenement identifiable and benefited by a
pipe-line proposal. It would be unsafe to rely upon voluntary deeds of grant of
easements in such cases.

6.4 Licences have their own weaknesses. Any utility is at the mercy of a company
reorganisation by a licensor. Without any obligation for either the old or the new
licensor to notify the licensee, the licensee becomes a trespasser on an unknown date.
Failure to take prompt action upon (albeit in some cases suspended until receipt of a
notice) renders him liable in trespass and, in the case of electricity undertakers,
precluded from promoting a CPO to retain his infrastructure.

6.5 From the perspective of the acquiring authorities one would expect a degree of
confidence in the future and a preference for a perpetual certainty. From the
landowner there might be a hope that things might change in the future either to justify
ridding the land of its encumbrance or to bring higher financial compensation or,
possibly, to trip up the statutory undertaker.

6.6 The answer why the electricity industry has not traditionally gone straight to the CPO
may well lie in the paternalistic approach of true nationalised statutory undertakers
like the CEA and CEGB. In 1988, in the run up to privatisation of the electricity
industry, the CEGB still had an unwritten policy that it did not use its CPO powers.
Although the new undertakers do not have such historical baggage, old habits die hard.

6.7 Why enter into voluntary variants such as wayleaves?

- terms can be crafted to the particular site
- goodwill might be retained
- speedier and cheaper resolution is a possibility
- the length of the period before termination is negotiable
- compensation can be adjusted to reflect the urgency

6.8 Why enter into a CPO?

- the period before termination may be longer

2
See Re Salvins Indenture [1938] 2 All ER 498.


- resolution may act as a helpful precedent
- withdrawal of objections more likely
- compensation may be less generous

6.9 By way of example, it is the Secretary of States policy that, if, after considering an
Inspectors report and recommendations he decides to grant an electricity undertaker a
necessary wayleave, he will usually grant it subject to a condition that it may only be
terminated after 15 years. Unlike voluntary wayleaves, necessary or compulsory
wayleaves which have been granted by the Secretary of State are binding on
successive owners and/or occupiers for the duration of the specified period during
which no notice to terminate can be served (paragraph 6(6)(b) of Schedule 4 to the
1989 Act). It is expressed to be the Departments considered view that a 15 year term
represents an equitable period which provides a balance between offering an
electricity company a degree of certainty for the installation of apparatus whilst still
affording the landowner the opportunity of having the position reviewed in the light of
subsequent changes in circumstances and the local environment. Parties who consider
that the necessary wayleave in question should be of a shorter or longer term should
give their reasons as part of their evidence and should explain why a different period
would be more appropriate in the particular circumstances.

6.10 Without a rationalisation of the variant CPOs, it is not possible to say that one course
is always better than another. Equally, as between undertaker and land owner or
occupier it is not possible to say that one course or another always suits one or the
other or both. For the future, it might be that some form of rationalisation could be
combined with or incorporate alternative dispute resolution which is, after all, now
recognises as an aspirational preliminary stage towards obtaining a CPO (Circular
06/04 para. 26).

Implications of Miller Homes Ltd v Yorkshire Electricity Distribution Limited
7. The circumstances of this case in Leeds highlight:

i) the precarious nature of wayleaves;
ii) the need for utilities to keep accurate and up to date records; and
iii) an immediate requirement, irrespective of any negotiations, to serve notices on
the Secretary of State requiring a necessary wayleave under Sch. 4 para. 6 on
receipt of any letter suggesting termination following change of ownership or
occupation.

7.1 Unbeknown to the Electricity Undertaker, it owned four 33kV cables and other
apparatus beneath the surface of Yarn Street, Leeds. These, it transpired, provided
strategic supplies to some 26,300 customers, including a Foundry. In addition these
Cables provide security of supply (i.e. back-up supply) to a further 95,800 customers
in Leeds. Matters proceeded in the following way:
- 21
st
December 2006 the property developer took a transfer of the development
site which was registered on 9
th
January 2007;


- 19
th
January 2007 a letter was received from the developers agent referring to
the termination of any existing wayleaves or any other agreement under
schedule 4 of the 1989 Act
3
;
- Neither party could locate any wayleave agreements at that time. The
Undertaker questioned what land of the developer the wayleaves crossed;
- Correspondence continued during May 2007 with the developer suggesting the
agreement of an easement or requesting a wayleave hearing;
- On 10th July 2007 the Undertaker received a letter stating that, as no
application had been made to the Secretary of State for a necessary wayleave
under Schedule 4 of the Electricity Act 1989, the Defendant intended to
commence proceedings for the removal of the apparatus;

- An agreement for a wayleave dated 1960 was subsequently produced by the
developer. It had not passed through the various transformations of the
Electricity Industry to the present Undertaker. Wayleaves are not registrable as
land charges;

- Proceedings for trespass, breach of statutory duty and damages were then
commenced;

- The Undertaker undertook to remove the cables by 1
st
April 2009.

7.2 The Judge held that the Undertaker could not resist liability for damages (period and
amount to be assessed).

7.3 The relevance of the case concerns the procedural elements behind the decision rather
than the decision itself. These stem fro Schedule 4, para. 8 of the Electricity Act 1989:

8(1) This paragraph applies where at any time [a necessary wayleave granted
by agreement ]

(b) is terminated by the owner or occupier of the land in accordance with a
term contained in the wayleave

(c) by reason of a change in the ownership or occupation of the land after the
granting of the wayleave, ceases to be binding on the owner or occupier
of the land.

(2) The owner or occupier of the land may


3




(b) in a case falling within paragraph (b) of that sub-paragraph, at any time
after the wayleave has been terminated by him.

(c) .at any time after becoming the owner or occupier of the land by virtue
of such a change in the ownership or occupation of the land .

give to the licence holder a notice requiring him to remove the electric line
from the land; but the licence holder shall not be obliged to comply with such
a notice except in the circumstances and to the extent provided by the
following provisions of this paragraph.

(3) Where within the period of three months beginning with the date of the
notice under sub-paragraph (2) above the licence holder makes neither

(a) an application for the grant of the necessary wayleave under paragraph 6
above; nor

(b) an order authorising the compulsory purchase of the land made by virtue
of paragraph 1 of Schedule 3 to this Act,

the licence holder shall comply with the notice at the end of that period.

7.4 Under 8 (1)(b), (2)(b) and (3) there is a two-stage process
4
which applies where there
is an express wayleave recorded in an Agreement.

- The first stage ((1)(b)) is to determine the Agreement in accordance with its terms
(the terms are likely to be specified in months i.e. 6 months).
- The second stage ((2)(b))is to serve a further notice requiring removal of the cables
at some point after termination of the Agreement and giving the undertaker 3
months from service of that second notice ((3)) within which it has the right to
seek a necessary wayleave from the Secretary of State.

This is a re-enactment of the provision of section 11 of the Electricity (Supply) Act
1922.

7.5 Under 8 (1)(c), (2)(c) and (3) there is only a single-stage procedure. Notwithstanding
the existence of a deed of grant, upon any change of ownership or occupation of the
land the wayleave ceases to be binding on the owner or occupier of the land. In such a
case:

- The single-stage ((2)(c)) at any point after change of owner or occupier is to serve
a notice requiring removal of the cables and giving the undertaker 3 months from
service of that single notice ((3)) within which the undertaker has the right to seek
a necessary wayleave from the Secretary of State.

7.6 This appears to contrast with the position before 1989 when any agreement would
continue to apply upon the terms of the Agreement, after termination upon change of
occupier, until determined in accordance with the Agreement (s.11 Electricity

4
See Guidance Note, Secretary of State for Trade and Industry (September 2002), para. 3.6


(Supply) Act 1922). There remains some uncertainty now as to the status of the
wayleave after change of ownership and before notice is served. In Electricity
Wayleaves Easements and Consents 2007 it is stated at p. 68 that:

8.6 Temporary continuation of wayleaves

Finally, we need to consider the nature of the wayleave implied by
paragraph 8 of schedule 4 to the Act. As explained above, the mere
termination of a wayleave does not automatically require a licence-holder
to remove the electric line from the land. There are further processes
which have to be co vbmpleted before an obligation to remove arises.
During that period, paragraph 8 of schedule 4 to the Act provides that
notwithstanding the termination of the express or implied voluntary
wayleave by notice of expiration of the term (or in express cases only
change of ownership) a wayleave will be deemed to continue on the
same terms and conditions as previously unless and until the process as
described [under schedule 4, paras 6 and 8] has been completed.
[emphasis added]

The authors would appear to agree that the statute has not re-enacted section 11 of the
1922 Act and therefore they consider it necessary to fill the deficit by an implied
wayleave which is then described as a deemed wayleave. It also says that the
paragraph provides that a wayleave will be deemed. However, I am unsure what words
in the paragraph say this. If there is a deemed wayleave on the original terms surviving
change of ownership, why would a specified period for termination not be deemed to
continue to apply and why should application for a necessary wayleave have to be
made within (and often well within) that period specified period, assuming the
specified period to be more than 3 months?

7.7 Interesting though such points may be, the lesson from this case is that it confirms that
an undertaker should consider itself at risk from a letter, however phrased, seeking to
terminate a wayleave upon change of owner or occupier. The undertaker cannot rely
upon the terms of the Agreement because, by the nature of a wayleave, termination is
instantaneous on the change. It would appear that a change can be engineered by
simple transfer between parties or companies. A prudent undertaker cannot risk
negotiating but must seek a necessary wayleave immediately. In effect, the undertaker
should always make a holding application. Such a bureaucratic approach could be
said to arise from an apparent error in the re-enactment of the law during privatisation.
In fact it is a result of the uncertain nature of a wayleave and the vulnerability of
contractual licence. It is another reason why utilities might prefer permanent
arrangements such as CPOs.

Compensation in the light of Welford v EDF Energy Networks (LPN) Ltd
8. The basis for compensation will depend upon whether the claim arises under a
statutory right or under a voluntary agreement: Christian Salvesen (Properties) Ltd v
CEGB (1984) 48 P&CR 465; Mayclose Ltd v CEGB [1987] 2 EGLR 18. The case of
Welford is the most recent case to consider compensation payable for wayleaves.

8.1 It concerned claims made by two individuals and a Skip Hire Company against a
licensed electricity distributor. A number of underground electricity cables crossed a


site which the individual Claimants had purchased with the intention of using it as a
waste transfer station. The site was purchased without knowledge of the cables. After
their discovery in July 1995, the Claimants gave notice requiring their removal on 12
th

September 1995. The electricity company applied for and obtained statutory
wayleaves allowing for the retention of the cables. Compensation was claimed:

i) under Sch 4, para 7 of the Electricity Act 1989 in respect of the
wayleaves granted in August 1998; and
ii) under an arbitration agreement referring the assessment of damages, if
any, arising between the notice to remove of 12
th
Sept. 1995 and the
grant of the wayleave on 17
th
August 1998 from the High Court to the
Lands Tribunal for determination
5
.

8.2 The issues arose from the inability of the Claimants to build a waste transfer handling
building on the site because of the presence of the cables.

8.3 The Lands Tribunal gave an interim decision on 10
th
March 2006. That decided:

i) Whilst Sch. 3 to the 1989 Act (grant of a statutory easement) applies the
provisions relating to the compulsory purchase of land (such as market value
of the interest acquired, injurious affection of the land retained, disturbance or
other loss not directly based on the value of the land) Sch. 4 makes no mention
of market value or injurious affection. Compensation for a wayleave is simply
compensation in respect of the grant and makes provision for damage and
disturbance in terms owing nothing to the compulsory purchase code (para.
43).

ii) Compensation for a wayleave covers (para. 44):

a) the value of the wayleave;
b) any consequential diminution in the value of the claimants land
(being all of the land held at the valuation date irrespective of the
area over which the wayleave was granted) but limited to 15 years
since any further wayleave thereafter would be subject to a fresh
claim (para.96); and
c) disturbance including loss of profit, tested against causation,
remoteness and reasonableness.

iii) Compensation for loss of profits was not reflected in the award for the
diminution of the value in land in this case because the diminution in value
excluded any premium value for use of the site as a waste transfer station
(paras. 90-95). That was included instead under loss of profit (upheld by the
Court of Appeal).

iv) Since the compensation for a disturbance by a wayleave is effectively the same
as for disturbance compensation for compulsory purchase, loss of profit could
include prospective use for a business not yet commenced if enforcement
action was not envisaged in respect of a use for which there was no planning

5
In contrast, no such agreement was reached in the Miller Homes case.


permission (para. 47). The Court of Appeal upheld this conclusion because it is
the coming into existence of the business and the investment in relation to the
land that is sufficient, even though the land is not yet being used for the
business (para. 31).

8.4 The Tribunal proceeded to a further decision [2009] RVR 10 on the question of the
amount of compensation payable to the company for loss of profits. Detailed valuation
points of importance were considered.

8.5 The Welford decisions provide a useful and contemporary insight into the approach
that the Lands Tribunal is likely to take to compensation claims in respect of
wayleaves:
i) the precarious nature of the arrangements under which high voltage cables
have been laid over the years;
ii) the difficulty of finding out where underground cables are since they are not
registrable as local land charges or revealed by local searches; and are often
not properly recorded;
iii) the problem for utilities in estimating or anticipating a disturbance claim.


Conclusion

9. The DETR Report entitled Fundamental review of the laws and procedures relating
to compulsory purchase and compensation July 2000 concluded:

While accepting that there may be a case for some differences in the
procedures appropriate for obtaining compulsory powers of access for
different types or scales of installation, the group was not convinced
that there was any real advantage in retaining different procedures for
similar types or scales of installation by different suppliers. Nor could
we see any logic in retaining the current approach whereby wayleaves
and easements seem to be being used interchangeably for the same
ends.

.we consider that the fairest approach to compensation would be to
devise a single code which could also provide a useful guide for
voluntary agreements. We can see no reason, and heard no argument,
against basing the assessment of compensation on the same principles
of equivalence as those which we have confirmed in this report as
providing the best approach to compensation for the compulsory
purchase of land

Nothing has changed or happened since.

10. The continuing absence of uniformity means that no general conclusions can be drawn
across the board. However, two points emerge: firstly, that the nature and meaning of
a wayleave or other licence is uncertain and the availability of an easement cannot be
assumed; secondly, that where compensation comes before the Lands Tribunal rather
than the Courts, the Tribunal will strive to find parallels with CPO compensation
principle if possible. The significance and effect of these two points may differ as
between utility and landowner or occupier.



R. L. Fookes
18
th
April 2009






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