1.       Dispute

The customer claims a payment of $2,012.50 for damage to the connected dialler in his monitored alarm system, which he says was caused by the lightning hitting a copper line maintained by the wholesale provider near his house. He says, without reference to a provision in the code, that the wholesale provider should have state-of-the-art lightning protection to prevent damage to any equipment connected to the copper lines maintained by the wholesale provider.

2.       Dispute outcome

The final decision of TDR is that the complaint is not upheld.

3.       Final determination

In making this determination I have considered the information provided by the customer, scheme member and the wholesale scheme member and:

•         Fairness in all the circumstances

•         Any relevant legal requirements, including the Consumer Guarantees Act 1993 (the CGA)

•         The Code and its service standards, including position statements; and

•         Any other relevant telecommunications code.

I discussed facilitation with the parties, including an initial phone conversation with the customer and the wholesale provider. I concluded that the parties would not be able to agree on a resolution, so I moved the matter to adjudication.

4.       The Dispute

4.1     The customer has an alarm system that is monitored by a security company via his copper phone lines. He says that this alarm system was damaged by lightning strikes in the Greater Wellington area on or about 20 May 2022. He says that there were no lightning strikes close to his house, but the lightning travelled through copper phone lines from an area that was subject to lightning strikes that night.

4.2     On 20 May, the customer contacted his service provider to say that he did not have any service. The service provider passed this matter on to the wholesale provider, who maintain and are responsible for the physical copper network.

4.3     The customer says that the wholesale provider should be liable to him for all repairs to his alarm system, as the lightning entered his equipment via lines that the wholesale provider is responsible for, and that the wholesale provider should protect customers from any damage by using protection devices to stop localised surges.

4.4     The wholesale provider says that they do have surge protection at local cabinets, but that these can never provide 100% protection, especially where lightning strikes very close to the customer’s property, meaning that any surge would not go through the wholesale provider cabinets and surge protection mechanisms. The wholesale provider goes on to say that the alleged damage to the customer’s property is not as a result of the wholesale provider’ equipment or service, but weather events outside of its control and liability.

4.5     There is disagreement between the customer and the wholesale provider over whether the local cabinet servicing the customer’s property was damaged by lightning on the night in question, with the customer saying that he was told that this specific cabinet needed to be repaired and the wholesale provider conducting a subsequent investigation to find that this cabinet wasn’t in fact damaged.

5.       Positions of the respective parties

Customer’s position

5.1     The customer’s position is that the wholesale provider, as the sole network provider should have lightning protection in place to protect all customers connected to their copper lines network, so that equipment that customers connect to the network are protected from damage. In this case, the customer says that the wholesale provider should have surge protectors inside and external to local cabinets in his response to the proposed decision.

5.2     The customer says that the wholesale provider, as the service provider, has the obligation (based on the CGA) to protect customers against preventable damage by supplier-owned equipment and network, including, but not limited to, preventable damage by lightning strikes to customers’ premises. Internal lightning protection on its own clearly does not present state of the art protection against lightning strikes. Accordingly, the customer submits that the wholesale provider is liable for any preventable damage caused to connected customer equipment due to negligence.

5.3     The customer goes on to say that his house did not experience any lightning strike directly, or a power surge via his 240V electricity connection, as other electronic equipment was undamaged. He therefore says that the copper phone line brought a power surge into his property and caused the alleged damage to his alarm system. 

5.4     His evidence for this assertion is a “ping” through to his security company every evening which was working well prior to the storm night on 19/20 May 2022. This point is submitted as proof that his alarm system’s dialler was fully functional the night before the alleged damage occurred.

5.5     The customer has also provided TDR with a letter dated 6 October 2022 from the customer’s alarm company saying:

The alarm panel control board in the alarm system at the above site has received a power surge through the telephone line which has inflicted damage and made the alarm system inoperative.

5.6     That letter referred to in para 5.5 above does not mention lightning or how the conclusion of a power surge was arrived at. No information is provided around the appearance of the apparently required replacement control board and keypads or how a power surge was manifest. The customer says that the damaged alarm panel and dialler is available for inspection.  

5.7     Two further documents were provided to TDR from the customer’s alarm company: an invoice for an inspection of the alarm dated 31 May 2022 in the amount of $100 plus GST and an undated alarm upgrade quotation in the amount of $1,650 plus GST. These documents give the total applied for of $1,750 plus GST or $2012.50 including GST.

5.8     The customer says that he is insured for lightning damage, but that he does not want to lose his no-claims bonus (not quantified or evidenced) or pay the excess of $760 plus (again not evidenced).

Scheme member’s position

5.9     The service provider noted that they do not own, operate or maintain the the wholesale provider network, they cannot be liable for damages on or to it. They go on to say that the wholesale provider is responsible for the maintenance of the copper network and the equipment connected to it, with the service provider’s involvement limited to passing on customers’ complaints for the wholesale provider to deal with.

5.10    A representative from the service provider emailed the customer on 11 July saying:

As per our senior technicians, the fault on the exchange should not affect or damage your equipment. We want to know if the security panel technician actually confirmed that the damage is indeed caused by the fault on the exchange? If yes, we might need a proof for it. Another thing is, we will also have to wait for the wholesale provider validation about this matter. We will need professional opinion from the wholesale provider attending technician and ask their side if the exchange issue can cause damage to your equipment.

5.11    The service provider clarified that the relationship between the service provider and the wholesale provider is one of two separate companies who work collaboratively to provide separate services to their mutual clients. The wholesale provider (The wholesaler) own and provide the copper network infrastructure and are therefore responsible for all parts relating to the infrastructure. The service provider (The retailer) is responsible for charging the customer for network services provided by The wholesale provider on their network. The service provider declined to cover the customer’s costs associated with to repairs to the alarm and noted their General Terms relating to liability which state:

5. Liability - Our liability to you

Subject to 5.1, we won’t be liable to you: (b) for any loss that is caused by events that we don’t reasonably control, for example, because of an act of God, earthquake, terrorism, strike, shortage of suitable labour or materials or any third party network provider.

The wholesale scheme member’s position

The wholesale provider’ response to the customer’s complaint can be summarised as follows:

5.12    There is no evidence of lightning damage, and a physical inspection has not shown evidence of damage to the wholesale provider network.  If there was lightning damage, then all customers in the cabinet would have been impacted, and a port change does not indicate lightning damage. The customer has not provided photos of damage to the alarm itself (such as burn marks, or other damage to indicate damage from a lightning strike). The wholesale provider have reviewed their fault records, and the fault raised by the complainant was as a result of a port issue. This is a common issue and is easily resolved by changing the port. A port issue does not indicate lightning damage. The wholesale provider submits that if there was a lightning strike on their network:

o        it would have damaged the ISAM broadband card in the cabinet, but they have not seen any evidence of that

o        it would have damaged the customer’s broadband equipment (such as a modem). However, the customer’s broadband worked correctly after the port change, it was just the complainant’s alarm that was not working (and was blocking the phone line)

o        then all customers on that cabinet would have been impacted.  But no other customers whose services use the cabinet reported a fault.

5.13    The wholesale provider go on to say that there were two faults raised by the customer (although the customer says that the second fault was a mistake by the wholesale provider).  The first on 20 May 2022 was resolved on 21 May 2022.  Although the technician may have referred to lightning damage on the first visit, there would have been no evidence of this, and a port change would not have suggested a lightning issue. A visit relating to a second fault on 13 June 2022 was cancelled by the customer on arrival (although as noted above the customer says that this visit was as a result of the wholesale provider’s error).  

5.14    Customers are responsible for their own equipment and the wholesale provider cannot be held liable for all equipment connected to its network. The wholesale provider’s fixed line terms state (at clause 5):

“You’re responsible for any telephone jack points and wiring inside your home (including fixing them if you need to).”

The wholesale provider End User Agreement states (at clause 2) that:

“Our network includes the connecting line to your property and all associated equipment and infrastructure (including the network termination point), all of which is provided and owned by us and may be located in, on, over or outside of your property. Our network does not include any line or equipment provided by someone else.”

Under the End User Agreement, liability for damage is limited to damage resulting from installation.

5.15    There are many ways for lightning to strike customers’ premises and there is inadequate evidence to conclude that the damage complained of in this case must have come along the copper lines that the wholesale provider maintains.

5.16    The alarm itself may have caused the fault.  This is because after the port was changed, both the wholesale provider network and the customer’s modem were operational. It was only the customer’s alarm that was not working, and the alarm was blocking the phone line from working. A lightning event would have impacted both the wholesale provider network and the customer’s modem. The alarm itself is likely quite old, and the quote for a replacement suggests an alarm with enhanced functionality, rather than a like-for-like replacement.

5.17    The wholesale provider has adequate mitigations on its network to protect against lightning events and are not required to provide the level of mitigations as the customer suggests.

5.18    The remedies in the CGA do not apply here, and there is no substantiation or merit in any allegation of the wholesale provider negligence.

5.19    The customer’s complaint is not in relation to the wholesale provider’ service, nor from any culpable actions of the wholesale provider and is in relation to equipment that the customer owns.

5.20    The wholesale provider is a Wholesale Service Provider and the customer’s relationship is with their Retail Service Provider (in this case Service Provider). Therefore, the terms between the customer and their RSP will apply, such as the RSP’s conditions of service (like the exclusion of liability referred to in para 5.7 above) and any CGA claim.

5.21    The wholesale provider also provided TDR with evidence of a lack of damage to its local cabinets, to show that the cabinet connected to the customer’s property did not suffer lightning damage on the night in question. While lightning strikes caused other faults in the area, I was presented with evidence to show that the cabinet that the customer’s connection runs through was not damaged.

6.       Reasons for the decision

6.1     Having considered the evidence presented by the customer, including his responses to the proposed decision, I find that there is insufficient evidence to conclude that the issues the customer is experiencing with his alarm system have come from a lightning strike to the copper lines in the Greater Wellington area. I reach this view based on a lack of direct evidence of damaged components and is based solely on a single sentence in a letter referring to a “power surge through the telephone line”. As noted in para 5.6 above, the letter does not mention lightning, or outline how that conclusion was arrived at. I have not seen any evidence as to how the conclusion of a power surge was reached and what evidence formed the basis of that conclusion, including a causal link between a lightning strike to copper power lines and specific damage to the alarm system. I am also not persuaded that the alarm system company is independent of the customer as there is a commercial relationship between them. The language of the quotation referring to an alarm “upgrade” (as noted in para 5.7 above) rather than damaged component replacement is also noted.

6.2     There is conflicting evidence presented by the parties as to the alleged damage to the alarm system and damage to the local cabinet supplying the customer’s copper service. The customer submits that a comment from the wholesale provider saying “On 21/05/2022, ports in the cabinet affected by lightning were repaired” is evidence that the specific cabinet supplying services to his property was damaged. I do not agree with that conclusion that an ordinary reading of these words leads to a conclusion that the wholesale provider admitted lightning damage to the customer’s cabinet.

6.3     Conversely, the wholesale provider has presented evidence that their cabinet supplying the customer’s service did not suffer lightning damage on the night in question and that subsequent enquires have established that the mitigation/protection measures in that cabinet were also not deployed by a power surge.

6.4     In resolving this difference, the evidence (or lack thereof) provided by the customer does not persuade me, that lightening stuck the cabinet or wires and even if it did, that it caused any damage to the customer’s property. In other words, on a balance of probabilities, I am not satisfied that the customer has met his evidentiary burden to show that lightning in the Greater Wellington area led to the specified damage to his property via copper phone lines, or that any lightning-induced power surge went through and damaged the cabinet that services his property.

6.5     Even if a causal link could be established showing that lightning caused the claimed damage, this still would not assist the customer.  This is because I am not persuaded that the wholesale provider would be liable for the cost of the repair in these circumstances. There is no express contractual provision setting out the wholesale provider’s liability to the customer in this situation. Some commercial contracts contain a force majeure clause to protect against the impact of events that are beyond the control of the parties to the contract. Force majeure is not an implied term, and therefore the wording in the contract must be specifically agreed between the parties.

6.6     Without an express contractual provision (or an implied term), the customer is forced to rely on general provisions relating to the supply of services under the CGA. The customer seeks to rely on the Purpose provision in the CGA in section 1A, specifically with regard to the services being safe and fit for purpose and carried out with reasonable care and skill. I’m also mindful of a supplier’s liability for damages from s32 (c), where the damage was “reasonably foreseeable as liable to result from the failure” (being a failure to comply with a guarantee set out in sections 28 to 30).

6.7     I accept the wholesale provider’s submission in this regard that a lightning strike is not in the supply of phone services to the customer. Lightning is out of the control of the parties (and therefore not a negligent act) and not is in the usual delivery of services to the customer. It is not being alleged that the alleged cause of any surge was as a result of a fault in the delivery of phone services, but rather that it was from a cause independent of that service supply. I note section 33 (b) of the CGA which specifically states that there is no right of redress where a service fails only because of “a cause independent of human control”. I find that lightning is such a potential cause outside of human control, so that the exception of liability from s33 applies to this situation.

6.8     The customer is therefore extending his argument on negligence to say that the negligent act he complains of is the wholesale provider’s alleged failure to have “state-of-the-art” surge protection for all customers connected to the copper network. I accept the wholesale provider’s submission on this point that it cannot provide 100% protection to every customer, and it would be impractical and onerous to do so and that they are not negligent in not providing absolute protection to every customer connected to the wholesale provider copper services. I accept the wholesale provider’s submission that the mitigation measures that they do have in place are fit for purpose and comply with their contractual and legal requirements. Areas of higher risk of lightning strike for example have enhanced mitigation and customers in those areas are also encouraged to have their own equipment to protect their assets and have adequate insurance.

6.9     To extend potential liability to find the wholesale provider potentially responsible to every property connected to copper phone wires for risks outside of their control, yet insurable by the customer, would not be reasonable or proportionate and without specific liability set out in contract or statute, I am not willing to extend that liability wider as the customer has requested.

6.10    While insurance hasn’t been a particular submission from any party, I note that lightning and other weather damage is a standard risk covered in home insurance policies. Where damage is caused to an insured party by negligence, an insurance company would have a right to pursue the provider via subrogation, but lightning is an insured risk, rather than being negligence. Insurance companies aren’t seeking to make utilities companies liable for damage to insured property on the basis that the utilities are liable, rather than lightning damage being a risk covered by standard insurance companies.  Surge protection devices are available for purchase for extra protection, and any resulting damage is a standard insured risk. This reinforces my view that the utilities provider cannot be held liable in negligence for a risk outside of their control that is included in standard home insurance policies.

7.       Future actions

As the claim has been dismissed, there are no actions required from the parties.