England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
TECHNOLOGY & CONSTRUCTION COURT

		Royal Courts of Justice Strand London WC2A 2LL
		22nd October 2004

1. MR JUSTICE JACKSON: This judgment is in seven parts, namely: Part 1, Introduction; Part 2, The Facts; Part 3, The Present Proceedings; Part 4, The Law on Acknowledgment of Claims; Part 5. Question 1: Can a claim for damages in tort fall within section 29(5)(a) of the Limitation Act 1980?; Part 6. Question 2: Is Welsh Water's claim against Carmarthen a liquidated pecuniary claim?; Part 7, Conclusion.

PRIVATE 

Part 1. Introduction.

2. This is the trial of a preliminary issue to determine whether a claim made in negligence and nuisance is statute barred. The claimant in this action is Dwr Cymru Welsh Water ("Welsh Water"), the defendant is the Carmarthenshire County Council ("Carmarthen").
3. Welsh Water began the present proceedings after expiry of the primary limitation period. Welsh Water contends that Carmarthen acknowledged the claim before expiry of the limitation period, thus triggering the operation of section 29(5)(a) of the Limitation Act 1980. Carmarthen denies that section 29(5)(a) is applicable to the present case.
4. Having set the scene with these few introductory remarks, I must now turn to the facts of the case.

Part 2. The Facts.

5. Welsh Water owns a public sewer, which runs beneath Upper Robinson Street, Llanelli. In 1995 Llanelli Borough Council engaged contractors to carry out underpinning works to properties in Upper Robinson Street. Those contractors employed sub-contractors who carried out piling works in August and September 1995. Most unfortunately three of the piles installed during that period penetrated the public sewer.
6. Two years later this mishap came to light. Carmarthen, who were, and are, the successors of Llanelli Borough Council, obtained a report from a firm of engineers. Those engineers carried out a CCTV survey and reported that three piles supporting No 44 Upper Robinson Street were penetrating the sewer. Carmarthen received this report during September 1997 and communicated the contents to Welsh Water on 30th September 1997.
7. Thereafter, discussions proceeded between representatives of Carmarthen and representatives of Welsh Water about two matters, namely: (1) what remedial works should be carried out; and (2) who should pay for these remedial works.
8. As to the first matter, over the next five years investigations were carried out, reports were prepared and a variety of different options were canvassed. No final agreement was reached between the parties as to what should be done. Nevertheless, it would be fair to say that by March 2002 localised repairs appeared to be emerging as the preferred option. No agreement was reached between the parties as to the cost of remedial works.
9. I turn now to the second aspect of the discussions. From October 1997 onwards Welsh Water made it clear in correspondence that it expected Carmarthen to bear the cost of remedial works. Carmarthen did not initially make any concessions in this regard. However, matters came to a head during 1999 and 2000. I will read out relevant parts of the correspondence during this period.
10. On 29th July 1999, Mrs Athay, the Litigation Solicitor of Welsh Water, wrote as follows to the Director of Rural and Administrative Services of Carmarthen:

"In September 1997 Carmarthenshire County Council advised Dwr Cymru's Sewerage Section that following complaints of structural problems to houses in Upper Robinson Street a survey of the public sewer which runs beneath some of those houses had been carried out. The survey showed that the sewer had been damaged by piles having been driven through the sewer in the vicinity of No 44 Upper Robinson Street. It appears that piles were placed for the support of some of the houses when the gas works area was developed on behalf of the former local authority in 1995/96.

"Dwr Cymru holds your Council responsible for the damage to the sewer. It will be necessary for remedial works to be carried out and your Council has in fact actively promoted the option of a diversion of the sewer to the rear of the properties. This is however likely to prove the most expensive option and we would like to discuss the position with you before remedial works are commenced.

"We do however expect your confirmation that the Council will meet the costs involved. My understanding is that the piles were constructed at the instigation of Llanelli Borough Council and that your Council will have inherited the liability of the former local authority for the continued maintenance of the piles and the completion of the development of the area. In those circumstances it is considered that your Council has legal responsibility for the damage to the sewer.

"If agreement cannot be reached, my instructions will be to commence legal proceedings against the Council. Although correspondence has not to date been helpful, I feel that a 'without prejudice' meeting, when hopefully we can have some constructive discussions, might enable litigation to be avoided."

11. On 8th November 1999, a meeting took place between the parties. Mrs Athay was present as solicitor for Welsh Water; Mr Wolfe of Douglas-Jones Mercer was present as solicitors for Carmarthen and Carmarthen's insurers. At this meeting various remedial schemes were discussed, and Mrs Athay made it clear that Welsh Water required Carmarthen to bear the costs.
12. On 8th December 1999 Mr Wolfe of Douglas-Jones Mercer wrote as follows to Mrs Athay:

"I refer to our meeting on 8th November and now write to confirm, as Solicitors representing the Local Authority's insurers that this claim is now being dealt with under the Policy and, I understand, that independent consultants have now been instructed to draw up a scheme."

13. Mrs Athay was due to retire during April 2000. On 3rd April, she wrote as follows to Mr Wolfe:

"I have been reviewing this file in the process of passing it on to my successor and in the light of the meeting which we had in November 1999 and your letter of 6th December, I think it would be sensible if you could confirm on the part of the local authority that liability in this matter is not denied and that it is only Quantum (which hopefully will be dealt with by way of the scheme which is being drawn up by independent consultants) that is still in question.

"I note that the limitation period is expiring at the end of this year and although I hope that this matter can be concluded long before then, I feel that I would have to advise that a Holding Writ be issued unless such assurance can be given on the part of the local authority."

14. On 5th April, Mr Wolfe replied that he was taking instructions. On 14th April Mr Wolfe wrote to Mrs Athay as follows:

"Further to my letter of 5th April, I now write to confirm that I am instructed on behalf of the local authority to formally concede liability is not in issue."

15. Later that month, Mrs Athay retired and Miss Christine Thorpe, a solicitor employed by Welsh Water, took over the conduct of the matter. Miss Thorpe familiarised herself with the history of this matter and read the documents which were on file. Miss Thorpe states in her witness statement, and I accept, that she took the letter of 14th April as an admission of liability and confirmation that a "holding writ" would not be needed. Miss Thorpe also took this letter as confirmation that Carmarthen would pay for the necessary remedial works.
16. In those circumstances discussions continued between the parties concerning possible remedial schemes, but Welsh Water did not at that stage commence litigation against Carmarthen.
17. In or about September 2001, the primary limitation period expired. The debate about remedial works continued. By early 2002 the scheme known as "Localised Repair" was emerging as the favoured option. In March 2002, however, there was a dramatic change in the course of events. Carmarthen declared that it was denying liability because the claim was statute-barred.
18. It was against this background that Welsh Water commenced the present proceedings.

Part 3. The Present Proceedings.

19. By a claim form issued in the Technology & Construction Court on 24th February 2004, Welsh Water claimed damages against Carmarthen for negligence and nuisance. In its Particulars of Claim, Welsh Water advanced three principal allegations of negligence. These were that Llanelli Borough Council:

1. Failed to ensure that piling works were performed in accordance with their engineer's drawing;

2. Failed to locate the position of the sewer adequately or at all;

3. Caused or permitted three piles to be driven through the sewer.

20. In addition, Welsh Water pleaded that the damage to the sewer constituted an actionable nuisance.
21. Welsh Water claimed by way of damages the costs of remedial works and associated professional fees. The proposed remedial works were not specified and the costs were not quantified in the Particulars of Claim.
22. On 8th April 2004, Carmarthen served a defence denying liability and asserting that the claim was barred by section 2 of the Limitation Act 1980. Thereafter, Welsh Water served a reply relying upon section 29(5) of the Limitation Act 1980 and asserting that Carmarthen had acknowledged the claim on 14th April 2000.
23. Carmarthen instituted Part 20 proceedings against the engineers and the piling sub-contractors who had been involved in the piling works. However, these Part 20 proceedings are not relevant to the present preliminary issue and I say no more about them.
24. On 23rd July 2004, His Honour Judge Wilcox ordered that the following issue be tried as a preliminary issue:

"The issue raised at paragraph 13 of the Defence and paragraph 4 of the Reply as to whether the claimant's claim in these proceedings is statute barred by virtue of section 2 of the Limitation Act 1980 (as the defendant contends) or whether the claim is not statute barred because of the provision of section 29(5) of the Limitation Act 1980 and/or as a matter of common law (as the claimant contends) (the 'issue')."

25. Welsh Water has subsequently conceded that there is no separate common law jurisdiction to extend the limitation period. Welsh Water relies only upon section 29(5)(a) of the Limitation Act. Accordingly, in the issue as formulated the words "and/or as a matter of common law" can be disregarded.
26. That preliminary issue came on for trial yesterday. At the start of the hearing I enquired whether Welsh Water was relying upon any form of estoppel. Both counsel told me that estoppel was not an issue in the case. Accordingly, the only matter upon which I must focus is whether section 29(5)(a) of the Limitation Act 1980 operates to extend the limitation period in the circumstances of this case.
27. This issue resolves itself into two principal questions:

1. Can a claim for damages in tort fall within section 29(5)(a) of the Limitation Act 1980?

2. Is Welsh Water's claim against Carmarthen a "liquidated pecuniary claim"?

28. I should mention at this stage that during the course of the hearing Mr Hughes, for the claimant, conceded that his claim in these proceedings could not be characterised as a "debt", and accordingly he relied only upon the second limb of section 29(5)(a), namely "other liquidated pecuniary claim".
29. I must first review the law on acknowledgment of claims and then address separately each of the two questions identified above.

Part 4. The Law on Acknowledgment of Claims.

30. The Limitation Act 1623 provided that an action for debt could not be brought more than six years after the cause of action arose. According to the preamble this Act was passed "for quieting of mens' estates and avoiding of suits". This statute could sometimes cause injustice and judges mitigated its effect in the following way. If the debtor acknowledged the debt or made a part payment on account during the first six years, then the limitation period started again. The law treated this as a promise to pay which revived the original cause of action.
31. This line of judge-made law was given statutory effect first in Lord Tenterden's Act 1828, and subsequently in the Mercantile Law Amendment Act 1856. Section 1 of Lord Tenterden's Act, so far as material provides:

"Whereas by an Act passed in England in the 21st year of the reign of King James I, it was, among other things, enacted that all actions of account and upon the case, other than such accounts as concern the trade of merchandise between merchant and merchant, their factors or servants, all actions of debt grounded upon any lending or contract without specialty, and all actions of debt for arrears of rent, should be commenced within three years after the end of the then present session of Parliament, or within six years next after the cause of such actions or suit, and not after; and whereas a similar enactment is contained in an Act passed in Ireland in the tenth year of the reign of King Charles I; and whereas various questions have arisen in actions founded on simple contract, as to the proof and effect of acknowledgments and promises offered in evidence for the purpose of taking cases out of the operation of the said enactments; and it is expedient to prevent such questions, and to make provision for giving effect to the said enactments and to the intention thereof: Be it therefore enacted ... that in actions of debt or upon the case grounded upon any simple contract no acknowledgment or promise by words only shall be deemed sufficient evidence of a new or continuing contract, whereby to take any case out of the operation of the said enactments or either of them, or to deprive any party of the benefit thereof, unless such acknowledgment or promise shall be made or contained by or in some writing to be signed by the party chargeable thereby."

32. Two features should be noted about this provision. First, this relief against the Limitation Acts only applied to actions based upon debt or upon contract. Secondly, the crucial phrase used was "acknowledgment or promise". These two features were retained in the Mercantile Law Amendment Act 1856. Section 13 of that Act provides:

"An acknowledgment or promise made or contained by or in a writing signed by an agent of the party chargeable thereby, duly authorised to make such acknowledgment or promise, shall have the same effect as if such writing had been signed by the party himself."

33. Throughout the 19th Century and the early 20th Century the courts construed the phrase "acknowledgment or promise" conjunctively rather than disjunctively. An acknowledgment had the effect of restarting the limitation period if the acknowledging party, either expressly or impliedly, promised to pay. See the speech of Viscount Cave in Spencer v Hemmerde [1922] 2AC 507 at 513.
34. The Limitation Act 1939 not only consolidated earlier limitation statutes, but also made some significant changes. Section 23(4) of the Limitation Act 1939 provided as follows:

"Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment."

35. It can be seen that section 24(3) of the Limitation Act 1939 introduced two important changes. First, the phrase "or promises" was omitted after the word "acknowledges". Secondly, the phrase "or other liquidated pecuniary claim" was added after the word "debt". I have not been able to find this phrase in any of the earlier statutes.
36. The courts have held that the effect of omitting the reference to "promise" is clear. A bare acknowledgment has the effect of restarting the limitation clock. It does not matter whether the defendant expressly or impliedly promises to pay the sum due. See Good v Parry [1963] 2QB 418 at 423; Surrendra Overseas Limited v Government of Sri Lanka [1997] 1WLR 565 at 573 to 574.
37. The courts have also considered the effect of the phrase "or other liquidated pecuniary claim" in a series of cases since 1939. In Good v Parry [1963] 2QB 418 the plaintiff, who claimed arrears of rent more than six years old, failed in his reliance upon section 23(4) of the Limitation Act 1939. In discussing that provision Lord Denning MR said this at pages 423 to 424:

"In order to be an acknowledgement, however, the debt must be quantified in figures or, at all events, it must be liquidated in this sense that it is capable of ascertainment by calculation, or by extrinsic evidence, without further agreement of the parties. For instance: 'I admit I owe you the sum shown in this rent book' would be a perfectly good acknowledgment, for it only needs to be calculated. Again, in Jones v Bellgrove Properties Limited [1949] 2KB 700 the balance-sheet contained the acknowledgment: 'To sundry creditors £7,638 6s 10d'. It was possible by extrinsic evidence to sort out the various items in that lump sum, and it was held to be a sufficient acknowledgment. But if the debt is not quantified and is not ascertainable without further agreement, then there is no acknowledgment sufficient to satisfy the statute.

"No doubt a promise in writing by a debtor to pay whatever sum is found due on taking an account is a good acknowledgment today just as it was before the Act, provided always that the amount is a mere matter of calculation from vouchers, or can be ascertained by extrinsic evidence, and is not dependent on the further agreement of the debtor."

38. In Dungate v Dungate [1965] 1WLR 1477, a debtor sent a letter to his brother saying:

"Keep a check on totals and amounts I owe you and we will have an account now and then ... Sorry, I cannot do you a cheque now."

39. The trial judge and the Court of Appeal held that this was a sufficient acknowledgment of indebtedness for the purposes of section 23(4). At page 1487, Diplock LJ said:

"There is clear authority that an acknowledgment under this Act need not identify the amount of the debt and may acknowledge a general indebtedness, provided that the amount of the debt can be ascertained by extraneous evidence. It has been possible in this case to ascertain by extraneous evidence what the indebtedness was …"

40. When the Limitation Act 1980 was enacted the substance of section 23(4) of the 1939 Act was retained. Section 29(5) of the 1980 Act provides:

"Subject to subsection (6) below, where any right of action has accrued to recover -

(a) any debt or other liquidated pecuniary claim; or

(b) any claim to the personal estate of a deceased person or to any share or interest in any such estate;

and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment."

41. In Amantillada Ltd v Telefusion plc [1987] 9 Con LR 139 the plaintiff carried out building and shopfitting works for an agreed sum. After expiry of the primary limitation period the plaintiff made a quantum meruit claim in respect of certain extra works. The plaintiff brought the claim more than six years after completion, but he relied upon a letter written by the defendant as constituting an "acknowledgment" for the purposes of section 29(5)(a) of the Limitation Act 1980. The plaintiff succeeded on this basis. The Official Referee, His Honour Judge John Davies QC, held that the plaintiff's quantum meruit claim fell within the category "other liquidated pecuniary claim" in section 29(5)(a) of the Act. At page 145 Judge Davies said:

"If the parties themselves cannot agree on what is a reasonable sum, the contractual obligation to pay such a sum provides a sufficiently certain and definitive datum to enable the court to ascertain its amount by calculation and circumstantial (or "extrinsic") evidence, in accordance with the terms of the contract and without any further agreement of the parties. Indeed, it would be remarkable for the law to impose such an obligation if it did not have those attributes.

"A quantum meruit claim for a 'reasonable sum' lies in debt because it is for money due under a contract. It is a liquidated pecuniary claim because 'a reasonable sum' (or a 'reasonable price' or 'reasonable remuneration') is a sufficiently certain contractual description for its amount to be ascertainable in the way I have mentioned ... Such a claim is different in kind from its opposite, which is a claim for unliquidated damages. The former is a claim for a specific sum, namely a reasonable sum due under a contract; it is no less specific for being described in words rather than in figures, provided it is sufficiently defined to be ascertainable - which it is, as I have already explained. The task of the court, if it has to assess such a sum, is one of translating the words of the contract into figures in order to effectuate the intention of the parties. The nature of a claim for unliquidated damages is wholly different. The function of the court is not one of interpreting the contract but of deciding, in accordance with legal principles, what compensation, if any, should be paid to redress any harm done by its breach. It is for these elemental reasons that a quantum meruit claim is a liquidated pecuniary claim, whilst conversely a claim for unliquidated damages is not, and cannot be such, even though it be claimed at a definite figure."

42. In Ross v McGrath [2004] EWCA Civ 1054, the claimant made three claims against the defendant, namely:

1. A claim for sums which were the price of building work and material supplied between October 1990 and May 1991;

2. Repayment of a loan; and

3. Repayment of another loan.

43. The claimant commenced litigation after expiry of the primary limitation period, but he contended that the defendant had "acknowledged the claim" within the meaning of section 29(5)(a) of the Limitation Act 1980 and thereby kept the cause of action alive. The defendant's letter, which was relied upon as an acknowledgment, read as follows:

"Further to our conversation when you asked me to confirm that I would pay you monies owed to you due to various ventures which we were involved in from 1989, I confirm that I am prepared to do this as and when the funds are available to me ...

"In the circumstances I am happy to confirm that you suggest the following amounts are owed by me to you:

1. £4,535 for materials supplied to Clifton Drive and booked to Singleton Street.

2. £7,500, which I agreed to pay you at the same time that I paid Russell Howarth.

3. £40,000 for a property in the Isle of Man.

4. £30,000 which you paid to John Lowe.

5. £10,784 outstanding for materials supplied to Clifton Drive from October to December 1990."

44. The Court of Appeal held that the claimant was entitled to succeed on this basis. The defendant had acknowledged liability in respect of each head of claim. The fact that the precise amount due on each head of claim still remained to be ascertained did not prevent the operation of section 29(5)(a).
45. It should be noted that in each of the above cases, and indeed in a number of other authorities which have been touched upon in argument, the claim which was revived by acknowledgment was either a claim made under a contract or else a claim of a similar nature. I have not been able to find any case in which a claim for damages of breach of contract or a claim for damages in tort has been revived by reason of an acknowledgment.
46. Having briefly outlined the evolution of the law in relation to acknowledgment of claims, I must now turn to the questions arising in the present case.

Part 5. Questions 1: Can a claim for damages in tort fall within section 29(5)(a) of the Limitation Act 1980?

47. Mr Hughes, for Welsh Water, contends that a claim for damages in tort can fall within the ambit of section 29(5)(a). He points out that the word "claim" in section 29(5)(a) is not qualified by reference to its legal basis. There is no express restriction to contract claims. He submits that provided a claim satisfies the criterion of being "liquidated", then it can fall within section 29(5)(a). Mr Hughes goes on to submit that the word "liquidated" in the context of section 23(4) of the 1939 Act and section 29(5)(a) of the 1980 Act has been given an extended meaning by the courts. See Good v Parry [1963] 2QB 418; Dungate v Dungate [1965] 1WLR 1477; Amantillada Limited v Telefusion plc [1987] 9 Con LR 139, and Ross v McGrath [2004] EWCA Civ 1054.
48. Mr Worthington, for Carmarthen, submits that a claim for damages in tort can never fall within section 29(5)(a) of the Limitation Act 1980. The language of the subsection suggests that any claim falling within its purview must have some affinity with debt. Furthermore, by definition a claim for damages in tort is not and cannot be a liquidated claim. In every case where section 23(4) of the 1939 Act or section 29(5)(a) of the 1980 Act has been successfully invoked, the claim in question has been of a contractual or similar nature.
49. On this issue I have come to the conclusion that Mr Worthington is right. In my judgment, any claim for damages in tort falls outside the scope of section 29(5)(a) of the Limitation Act 1980. I reach this conclusion for four reasons:

1. In all legislation prior to 1939 the doctrine of acknowledgment applied only to claims in contract. If Parliament had intended to extend this doctrine to tortious claims it would have done so expressly. There is no express reference to tort in the subsection.

2. The phrase "liquidated claim" connotes a claim for a specific sum or, alternatively, for a sum which can be readily and precisely ascertained. None of the authorities reviewed in Part 3 of this judgment is inconsistent with this proposition. A claim for damages in tort is by definition not a liquidated claim. The assessment of damages in tort involves the application of a set of common law rules to the particular circumstances of the case. The application of those rules may be relatively straightforward in some instances, but that does not make the claim a liquidated one.

3. The global phrase "any debt or other liquidated pecuniary claim" suggests a sum which is due to be paid pursuant to some contractual or similar obligation. The words on their natural meaning do not connote damages or compensation which the law requires to be paid by someone who has acted in breach of an obligation or duty.

4. In none of the cases cited by counsel or uncovered by my own researches has a claim in tort ever been revived by reason of an acknowledgment.

50. I have reached the above conclusion as a matter of statutory interpretation. I am comforted to see that this conclusion is consistent with the following academic works: Chitty on Contracts, 29th Edition, paragraphs 28 - 092 and 28 - 093; Halsbury's Laws, Volume 28, paragraph 1083; the article "Limitation of Actions in Restitution" by HM McLean [1989] CLJ 472 at pages 477 to 479.
51. One interesting question which arose during argument was whether a claim for liquidated damages, for example following delay by a building contractor, would fall within section 29(5)(a) of the 1980 Act. This question does not arise in the present case, but it is a useful means of testing the proposition set out above. When a defendant pays liquidated damages, he is paying a specified and predetermined sum which has been calculated in accordance with a term of the contract. Therefore, it seems to me that this is a claim which would be fall within the ambit of section 29(5)(a), despite having the label "damages".
52. Let me now return from that digression to the central question. For all of the reasons stated above, my answer to the question posed in Part 5 of this judgment is no.

Part 6. Question 2: Is Welsh Water's claim against Carmarthen a liquidated pecuniary claim?

53. If I am wrong in Part 5 of this judgment, then the question arises whether on the facts of this case Welsh Water's claim against Carmarthen constituted a liquidated pecuniary claim.
54. In my judgment, Welsh Water's claim could not be regarded as a liquidated pecuniary claim either in September 1995, when the cause of action accrued, or on 14th April 2000 when Carmarthen admitted liability. On both of those dates the computation of damages would be a complex and controversial exercise. There were substantial issues as to what form the remedial works should take. The costing of such works would be an elaborate exercise because demolitions, reconstruction and work underground would be involved. There were also serious issues as to betterment, mitigation of loss and so forth. With all due respect to the eloquence of Mr Hughes, by no stretch of the imagination could Welsh Water's claim be characterised as a liquidated claim.
55. It should be noted, incidentally, that even in the Particulars of Claim served almost seven years after discovery of the damage, no attempt has been made to quantify Welsh Water's loss.
56. For all of these reasons my answer to the question posed in Part 6 of this judgment is no. Accordingly, even if tortious claims fall within section 29(5)(a) of the Limitation Act 1980, nevertheless Welsh Water, in the circumstances of this particular case, cannot rely upon that statutory provision.

Part 7. Conclusion

57. On 14th April 2000, the solicitor acting for Carmarthen wrote a clear and unequivocal letter admitting liability for the damage caused to Welsh Water's sewer. In the light of that letter Welsh Water did not commence proceedings during the primary limitation period. Once that limitation period had safely passed Carmarthen changed its position and denied liability.
58. I cannot pretend that I am favourably impressed by the litigation strategy which the County Council has adopted. However, this court sits as a court of law, not a court of morals. The events which have occurred in this case do not trigger the operation of section 29(5)(a) of the Limitation Act 1980.
59. For the reasons stated in Part 5 and Part 6 of this judgment, my answer to the preliminary issue is that the claimant's claim in these proceedings is barred by virtue of section 2 of the Limitation Act.
60. That effectively disposes of the whole action. With some regret, I must order that Welsh Water's claim be dismissed.