Waterway – Water abstraction – Payments – Defendant holding licence to abstract water from river – Defendant being obliged to make payments to claimant as body under statutory duty to maintain waterways – Claimant seeking declarations concerning amount of payments – Whether payments being contribution towards cost of waterway or as consideration at market value for water extracted – Whether other bases upon which defendant obliged to make payments – Declarations granted
The claimant was the immediate successor to the British Waterways Board which was under a statutory duty, among other things, to maintain commercial and cruising waterways. It was concerned with the management of approximately 2000 miles of waterways in England and Wales including the River Lee which rose near Luton and flowed into the River Thames near Canning Town in East London. The claimant’s income was derived from a funding agreement with the Government, licensing of boats and moorings, marinas, utilities including the sale of water, investments, joint ventures and contributions and donations. All of its income was used to meet its statutory obligations.
The defendant was a private utilities company ultimately owned by international institutional investors. It was responsible for the public water supply and treatment of waste water in large parts of the south of England and elsewhere. Thames was also the successor to other bodies (“the two companies”). The defendant held two licences to extract water from the River Lee, both of which had been granted in September 1966.
A dispute arose between the parties concerning the amount of the payments which the defendant was obliged to make to the claimant in respect of water it abstracted from the River Lee. In essence the court was required to determine whether: (i) the defendant was required to make payments by way of contribution to the cost of management of the river as a waterway or as consideration at the market value for the water extracted from the river which it was alleged that the claimant would otherwise be able to sell to others; and (ii) whether there was any basis other than under the River Lee Water Act 1855 upon which the defendant was obliged to make the payments.
Held: The claim was allowed.
(1) It was necessary to construe the specific provisions of the 1855 Act with which the dispute was concerned in the light of the Act as a whole, in its legislative and policy context. Properly construed and when read in its context, the 1855 Act in essence encapsulated a bargain whereby the trustees gave up once and for all and in perpetuity all rights in relation to the waters flowing in the River Lee from time to time, which vested in the two companies, subject to a proviso as to the maintenance of water levels necessary for navigation and remained responsible for maintenance and repair of the waterway, in return for a one off payment of £42,000 and an annual sum: 9 Cornwall Crescent London Ltd v Mayor & Burgesses of the Royal Borough of Kensington and Chelsea [2005] 2 EGLR 131, Mitsui Sumitomo Insurance Co (Europe) Ltd v Mayor’s Office for Policing and Crime [2016] PLSCS 116; [2016] 2 WLR 1148 considered.
(2)The intended effect of the Water Resources Act 1963 and the Lee Conservancy Catchment Board (New Functions of River Authorities) Order 1965 was to confer upon the Board the new water resources functions of a river authority by applying the 1963 Act, as modified. In the light of the preservation of section 5 of the 1855 Act and the obligation to make special payments as before, but for the imposition of the licensing regime and the payment for licences which governed abstraction, nothing had changed. The nature of the special payments remained as before. They related both to the maintenance and repair of the river and to the once and for all transfer of the rights to all of the water in the river which the trustees had had a right to sell in 1855, but for that which was necessary for navigation. The special payments therefore were, in part, consideration for the transfer of the right to water made in 1855 and not to the supply of water on an ongoing or annual basis, despite the fact that the two companies and their successors were required to make annual payments.
(3) The court rejected the argument that the 1855 Act merely embodied a contractual agreement and that the special payments under section 5 were directly and only payments for the supply of water. This matter had been governed by statute since at least 1855 and although there might be potential for a contract for sale in certain circumstances, it did not arise in relation to the water which was the subject of the licences as of right held by the defendant and the continued obligation to make the special payments under section 5; there was no evidence upon which to base a contractual relationship and nothing from which to conclude that the parties intended to create legal relations. Given the continuation of the section 5 special payments by the 1965 Order, there was no room and no basis upon which a contract in respect of the water which was subject to the licences of right could be implied.
(4) An alternative claim in restitution was rejected. Even assuming that there was water in relation to which there had been a wrongful interference, such a claim would naturally lie in tort and not in contract and so would be barred by section 48(2) of the Water Resources Act 1991.
(5) The necessary elements of a claim in unjust enrichment were not made out and, even if they were, it would be barred by section 48(2) of the 1991 Act. Further, any benefit as a result of the abstraction of the water was not at the claimant’s expense. There was no water to which the claimant was entitled since it had sold its rights to the water in 1855.
Stephen Tromans QC and Catherine Dobson (instructed by Eversheds LLP) appeared for the claimant; Mark Hopgood QC and Sarah Abram (instructed by BLP) appeared for defendant.
Eileen O’Grady, barrister
Click here to read transcript: Canal & River Trust v Thames Water Utilities Ltd
