Developer succeeds in appeal to House of Lords from above decision–Important discussion of ambit of section 37 and associated provisions of Water Act 1945–Cases of new mains altogether and improvement of existing mains evidently to be distinguished
The Cherwell
District Council (successors to the Banbury Borough Council) appealed from the
decision reported above in favour of the Oxfordshire & District Water Board
(now Thames Water Authority).
Mr G E
Moriarty QC and Mr A J Anderson (instructed by Jaques & Co) appeared for
the appellants, and Mr M Mann QC and Mr H Donovan (instructed by Lewin,
Gregory, Mead & Sons) for the respondents.
In a speech
with which the remainder of their Lordships agreed, LORD DIPLOCK said: In 1971,
the Banbury Borough Council (the predecessors of the Cherwell District Council)
proposed to build, upon land they owned at two sites in the borough, dwellings
for which a supply of water for domestic use would be needed. The Borough of
Banbury was within the limits of supply of the Oxfordshire and District Water
Board (the predecessor of the -Thames Water Authority), who were the statutory
water undertakers for that area. At neither of the sites were there existing
water mains from which a supply of water for the new buildings could be
obtained. This would require the laying of new mains. At that time the source
of supply for the borough was water pumped from the River Cherwell into a
service reservoir. This source, however, was becoming inadequate for the
growing demand. To supplement it the board proposed to extract water from the
Thames near Woodstock and convey it by a 27-in trunk main to the existing
service reservoir at Banbury. Being desirous of exercising their right under
section 37 of the Water Act 1945 to require a water board to lay mains from
which a supply of water to the proposed new buildings could be obtained, the
council asked the water board how much the board would require them to
undertake to pay under the provisions of that section. In reply, the board
quoted a figure which comprised two elements:
(1) the cost of laying the new mains which would
be needed in the immediate vicinity of the sites, and
(2) a contribution towards the cost of the proposed
new 27-in trunk main conveying water from the Thames to the existing service
reservoir for supplying the whole of the borough of Banbury.
The total cost
of laying the new trunk main was of the order of £1m. The contribution towards
this total demanded in respect of the two sites was small, viz £374 for one and
£352 for the other. It appears to have been based upon the estimated proportion
of the total gallonage of water passing through the trunk main which would be
supplied to the buildings on those particular sites. The council accepted their
liability for the first element, viz the cost of laying the new mains in the
immediate vicinity of the two sites, but contended that the water board were
not entitled under the section to demand any contribution from them towards the
cost of the proposed 27-in trunk main. By originating summons of December 21
1971 the council sought a declaration ‘whether the defendants’ (sc the water
board) ‘can lawfully demand the said sums of £374 and £352 as said contributions
in respect of the said 27-in diameter trunk main or at all.’ The actual amount at stake was small, but
both parties wished to have settled a question of principle as to the
construction of section 37 of the Water Act 1945. In the belief that it would facilitate
this, leading counsel for the two parties before the commencement of the
hearing of the summons before Mocatta J agreed as follows:
We agree that
the single issue between the parties is whether a trunk main is in law capable
of falling within the phrase ‘necessary mains’ as employed in proviso (a)
to section 37 (1). We further agree, that, if the answer to that question is
‘yes,’ then no further question arises either as to whether the
Woodstock-Banbury trunk main is in fact a necessary main or as to whether
the proportion of the cost attributed to the plaintiff’s development is
correct. In other words the simple answers ‘yes’ or ‘no’ are each equally
conclusive of the action.
In my view,
the effect of this agreement is to substitute for the question raised in the
originating summons, which was the actual question at issue between the
parties, a broader and purely hypothetical question which the court should not
have entertained. The result in the instant case has been unfortunate. The
agreement assumes that if, upon the true construction of the section, the
expression ‘necessary mains’ is capable of including any trunk main at all, the
27-in trunk main conveying water from the Thames to the service reservoir at
Banbury must be included in that expression. It thus diverts the court from a
consideration of the meaning of the expression ‘necessary’ as descriptive of
the mains to which the section applies, by purporting to exclude as a possible
answer to the question raised in the originating summons that although in some
circumstances a trunk main may be a ‘necessary main’ within the meaning of the
section, the 27-in trunk main from Woodstock to Banbury is not. In the result,
the only question argued at the original hearing by Mocatta J and in the Court of
Appeal was the hypothetical question: ‘Aye or nay, does the expression
‘necessary mains,’ upon a true construction of the section exclude all trunk
mains?’ In his reasons for judgment,
Mocatta J dealt only with this hypothetical question. He answered it
‘Aye.’ In the Court of Appeal, too, the
reasons given by the majority (Edmund Davies and Stephenson LJJ) dealt only
with the hypothetical question. They answered it ‘Nay.’ Nevertheless, the formal order of the Court
of Appeal answered the actual question raised by the originating summons. It
declared ‘that in regard to the requirement made by the [Oxfordshire &
District Water Board] in respect of the proposed building of the [Banbury
Borough Council] at Penrose Drive and at Ruscote in the Borough of Banbury the
27-in diameter trunk main to be laid by the water board between the outskirts
of Wodstock and their service reservoir at Banbury is a necessary main for the
purposes of proviso (a) to section 37 (1) of the Water Act 1945.’ It was only Sir Gordon Willmer who directed
his mind to the actual question. He was of opinion that the 27-in main was not
a ‘necessary main’ within the meaning of proviso (a) to section 37 (1)
of the Water Act 1945. I think that he was right.
A court that
is called upon to construe a statute in order to determine an issue between
parties to litigation must not allow itself to be deflected from its task of
deciding what the language of the statute means by any agreement between those
parties which involves, expressly or by implication, some assumption as to that
meaning. On such a matter the constitutional function of a court as the
interpreter of the written law compels it to reach its own unfettered decision.
This House would be failing in its duty if it confined itself to the hypothetical
question dealt with in the judgments of Mocatta J and the majority of the Court
of Appeal, and treated the answer to that question as conclusive of the actual
question raised in the originating summons–as was done in the order made by the
Court of Appeal. In the view I take as to the true construction of the statute,
to do this would provide no useful guidance as to the application of the Act to
other cases. It could only lead to confusion. It might positively mislead. I
turn, then, to the question of construction unfettered by any agreement between
counsel for the parties as to its meaning, or as to its effect in the
particular circumstances of the instant case. The Oxfordshire & District
Water Board was constituted by an order made by the Minister under section 9 of
the Water Act 1945. The order incorporated, with some immaterial exceptions,
the provisions of the third schedule to the Act, which is a modernised version
of clauses formerly contained in the Waterworks Clauses Acts 1847 and 1863. The
relevant powers and duties of the board are thus to be found in Part IV of the
body of the Act (which includes section 37) and in the third schedule. There is
an interpretation section, section 59, in the body of the Act, but a more
comprehensive one is contained in clause 1 of the third schedule. (To avoid
confusion between sections of the Act which bear the same number as sections in
the third schedule, I refer to the latter as ‘clauses.’) The definitions that are relevant to the
construction of section 37 appear for the most part only in clause 1, but it is
not, and in my view cannot be, disputed that where expressions there defined
are used in the body of the Act the same meaning is to be ascribed to them. The
only definitions which I find it necessary to cite are ‘main,’ ‘trunk main’ and
‘supply of water in bulk’:
‘main’ means
a pipe laid by the undertakers for the purpose of giving a general supply of
water as distinct from a supply to individual consumers and includes any
apparatus used in connection with such a pipe;
‘trunk main’
means a main constructed for the purpose of conveying water from a source of
supply to a filter or reservoir, or from one filter or reservoir to another
filter or reservoir, or for the purpose of conveying water in bulk from one
part of the limits of supply to another part of those limits, or for the
purpose of giving or taking a supply of water in bulk;
‘supply of
water in bulk’ means a supply of water for distribution by the undertakers
taking the supply.
‘Main’ is thus
a genus of water pipe of which ‘trunk main’ is a species embracing four
sub-species which have the common characteristic that they are pipes conveying
water in bulk to some place such as a reservoir from which it is distributed by
the undertakers. It is convenient to refer to mains which are not trunk mains
as ‘distribution mains,’ as has been done in the courts below. The scheme of
the Act and schedule as respects the rights of owners and occupiers of existing
premises to demand and receive from statutory water undertakers a supply of
water for domestic purpose is this:
(1) Where there are existing mains which are
capable of being reached by a service pipe from the premises the owner or
occupier is entitled to demand to be connected with the main and to receive a
supply of water for domestic purposes, on payment or tender of the water rate.
That part of the service pipe that lies between the main and the boundary of
the street in which the main is laid is to be laid by the undertakers; the
remainder by the owner or occupier of the premises. He must pay the cost to the
undertakers of laying their part of the service pipe and connecting it to the
main: but no part of the cost of the main itself can be demanded of him. Even
if the capacity of the existing main is insufficient to provide his premises
with a constant supply at adequate pressure (as the undertakers are obliged to
do by clause 39) they cannot demand any payment towards the cost of replacing
the existing main by one of greater capacity or of any other measures required
to enable them to fulfil this obligation (see clauses 30, 40 and 41).
(2) Where premises are in an area in which there
are no existing mains capable of being reached by service pipes from those
premises, the owners or occupiers of such premises may combine together to
require the water undertakers to lay ‘the necessary mains.’ The undertakers must comply with this
requirement if the requisition is made by owners or occupiers of premises in
respect of which the water rates payable annually will, in the aggregate, be
not less than one-eighth of the cost of providing and laying the necessary
mains (clause 29). This right, which corresponds with a former provision of the
Waterworks Clauses Acts, has been supplemented by a new provision contained in
the body of the Water Act 1945. In cases where there are not sufficient owners
or occupiers of premises
authorises a local authority to undertake to make good to the undertakers for a
maximum period of 12 years the deficiency (if any) between the water rates
payable annually in respect of premises in the area and the one-eighth of the
cost of providing and laying the necessary mains. Upon such an undertaking
being given, the water undertakers are obliged to lay the necessary mains and
to bring water to the area. Although when the new mains have been laid the
owner or occupier of any premises in the area must pay the cost of laying a
service pipe connecting them with the premises, no contribution may be demanded
of him towards the cost of laying the new mains or of bringing water to them.
His liability is confined to paying the annual water rate levied upon him in
common with all other consumers of water for domestic purposes.
Prior to the
Water Act 1945 an owner of land had no statutory right to require water
undertakers to lay new mains for the supply of water for domestic purposes to a
building which he proposed to erect but had not yet erected. All that he could
do was to complete the building and hope that when it was completed he, either
alone or in combination with owners or occupiers of other premises in the same
area, would qualify by reason of the aggregate rateable value of the premises
to make a requisition upon the undertakers under the provision of the
Waterworks Clauses Act corresponding to clause 29 of the third schedule to the
Water Act 1945. The Public Health Act 1936, however, made it impracticable to
build houses in reliance on this hope alone. Section 137 of that Act compelled
a local authority to reject plans for new houses unless they were satisfied
that a supply of wholesome water sufficient for the domestic purposes of their occupants
would be provided. Section 37 of the Water Act 1945 was a new provision
designed to deal with this situation. Minor amendments were made to it by the
Housing Act 1949, section 46: but I do not think that these affect the meaning
of the expression ‘necessary mains,’ which was also in the section before it
was amended. It is sufficient to cite it only in its amended form:
(1) Where an owner of land proposes to erect
thereon buildings for which a supply of water for domestic purposes will be
needed, he may require any statutory water undertakers within whose limits of
supply that land is situated to construct any necessary service reservoirs, to
lay the necessary mains to such point or points as will enable the buildings to
be connected thereto at a reasonable cost and to bring water to that point or
those points, and thereupon the undertakers shall, subject as hereinafter
provided, comply with that requisition;
Provided that
the undertakers before complying with a requisition under this subsection–
(a) may require the owner to undertake to pay in
respect of each year a sum amounting to one-eighth of the expense of
constructing the necessary service reservoirs and providing and laying the
necessary mains (less any amounts received by the undertakers in respect of
water supplied, whether for domestic or non-domestic purposes, in that year
from those mains) until the aggregate amount of water rates payable annually,
in respect of the buildings when erected and in respect of any other premises
connected with the said mains at the rates for the time being charged by the
undertakers equals or exceeds such sum as aforesaid or until the expiration of
a period of 12 years, whichever first occurs; and
(b) except where the owner is a local or public
authority, may also require him to deposit with the undertakers as security for
payment of the said annual sums, such sum, not exceeding the total expense of
constructing the service reservoirs and providing and laying the mains, as the
undertakers may require.
(2) The undertakers shall pay interest at the
prescribed rate or, if no rate is prescribed, at 4 per cent per annum on any
sum in their hands by virtue of a requirement under paragraph (b) of the
proviso to the last foregoing subsection, and shall, on the request of the
owner of the land, appropriate out of that sum any amount due under the
undertaking referred to in paragraph (a) of the said proviso and shall, when
the said undertaking is finally discharged, repay to the owner any sum
remaining in their hands as aforesaid.
(3) Any question arising under subsection (1) of
this section as to the point or points to which mains must be taken in order to
enable buildings to be connected thereto at a reasonable cost shall, in default
of agreement, be determined by the Minister.
(4) If the undertakers, after receipt of a
requisition under subsection (1) of this section and after tender to them of
any undertaking or deposit which they may require in accordance with that
subsection, do not before the expiration of three months (or, where a question
has, before that time, been referred to the Minister under the last foregoing
subsection, before the expiration of three months from the date when the
Minister notifies the undertakers of his decision, if that period expires later)
comply with the requisition, they shall, unless they show that the failure was
due to unavoidable accident or other unavoidable cause, be guilty of an offence
against this Act.
‘Mains’ is, by
virtue of its definition in the Act, a generic term which prima facie
includes trunk mains as well as distribution mains, unless the context in which
it appears makes it clear that it was used in some more restricted meaning. In
section 37 (as also in clause 29) the only express restriction upon its
generality is that the mains must be ‘necessary.’ This is, in my view, the key word in the
section for the purpose of deciding the actual question raised by the
originating summons. It poses immediately the question: ‘Necessary for
what?’ The section presupposes, first,
that there are no existing mains bringing water to points at which it would be
practicable at reasonable cost to connect the proposed buildings to those mains
by service pipes. If there were, there would be no need for any requisition.
Once the building was erected the owner would be entitled to require the
connection to be made under clause 30, without any liability to contribute to
the cost previously incurred by the undertakers in laying the existing mains or
to the cost of replacing them by mains of greater capacity to meet the
additional demand resulting from the connection of the newly-erected building
to them. Secondly, the section presupposes that there will be a supply of water
in bulk capable of being brought to the new mains by the undertakers, which (if
it is not already available to them) it is their duty to procure without
demanding from the requisitioner any contribution to the cost of doing so. Thus
the ‘necessary mains’ with which the section deals are confined to new mains to
be laid by the undertakers in a street or other place where there are no
existing distribution mains and to start from a point to which a supply of
water is already being brought in existing works belonging to the undertaker;
and the answer to the question ‘Necessary for what?’ is: necessary in order to
convey the water from that starting-point to points at which it would be
practicable to connect the proposed buildings to those mains by service pipes,
and for no other purpose.
The section
contemplates that as well as ‘necessary mains’ there may be ‘necessary service
reservoirs’ to be constructed. Ex hypothesi these must lie between the
starting-point to which a supply of water is already being brought in existing
works belonging to the undertakers and the new distribution mains to which the
proposed new buildings will be connected. The new main which will carry water
from that starting-point to the service reservoir may well fall within the
definition of ‘trunk main’; and if the new trunk main and the new service reservoir
will serve no other purpose than to convey water from that starting-point to
the new distribution main or mains to which the proposed buildings in respect
of which the requisition has been made will be connected it will, in my view,
fall within the expression
section 37 I would construe ‘necessary’ as applicable to new mains and service
reservoirs provided for that purpose only, and not to mains or reservoirs which
will also serve some other purpose of the undertakers in connection with the
supply of water to existing consumers or to potential new consumers whose water
will not be brought to them through the new distribution main or mains. To
ascribe any wider meaning to the word ‘necessary’ where it appears in section
37–or, in a similar context, in clause 29–would in my view conflict with the
general scheme of the Act for allocating the cost of works between the proceeds
of the annual water rate payable by the general body of consumers of water for
domestic purposes and charges additional to the water rate imposed upon
particular consumers. Once works have been constructed by the undertakers which
bring a supply of water to an existing distribution main, the cost of additions
or improvements to any of those works lying between the ultimate source of the
supply and service pipes connected with that main, which are needed to meet
increased demand for water, must be provided for out of the proceeds of the
annual water rate or loans serviced out of the proceeds of that rate. No
additional charge may be imposed upon the individual consumers who benefit from
particular additions or improvements, even where they are new consumers whose
exercise of their right under clause 30 to have their premises connected to an
existing main has caused the increased demand. The Act thus appears to accept
as a general principle that new consumers as well as old are entitled to the
benefit of additions and improvements to existing works rendered necessary by
increased demand for water for domestic purposes which they themselves have
caused; and that they cannot be required to make any individual contribution to
the cost of those additions or improvements beyond what is payable by them by
way of the annual water rate in common with consumers who may derive no such
benefit.
It would seem
to conflict with that principle that an exception should be made in respect of
additions or improvements to works lying between the ultimate source of supply
and the point to which water had already been brought by the undertakers,
merely because the supply to the new consumer involved, in addition to the
laying of service pipes, the laying of a new distribution main beyond that
point to a point in the vicinity of the premises for which the water was
required. Moreover, there are specific indications in section 37 itself that
this was not intended. Although in the instant case the board have restricted
their demand to requiring the council to undertake to pay annually only a
minute proportion of the one-eighth of the total cost of laying the 27-in trunk
main from the Thames to the existing service reservoir at Banbury, there is
nothing in the section to compel them to do so if that main is included in the
expression ‘necessary main.’ They could
have demanded an undertaking extending to one-eighth of the total cost of the
27-in trunk main, and if the requisitioner had not happened to be a local
authority they could have required him to deposit as security a sum equal to
that total cost. Again, the method of calculating the sums payable in each year
pursuant to the undertaking appears to contemplate that all the works to which
the undertaking relates (whether mains or service reservoirs) will serve to
supply with water a single identifiable group of consumers liable to pay water
rates in respect of water supplied from such of the works as are mains. There
is no provision for allocating the total cost of the necessary service
reservoirs and the necessary mains between the cost of reservoirs on the one
hand and the cost of mains on the other, or between one main and another, so as
to enable account to be taken of the water rates payable by one group of
consumers in calculating the requisitioner’s liability in respect of one part
of the works and those payable by another group of consumers in calculating his
liability in respect of another part of the works. The calculation envisaged by
the section provides only for the assessment of the aggregate cost of works of
which it can be predicated that all the mains included in them will
serve to supply water to the same group of identifiable consumers and none will
serve to supply water to other groups as well. In the instant case it is common
ground that the 27-in trunk main, when completed, would serve to supply water
to the general body of consumers of water for domestic purposes as well as to
the proposed new buildings that were the subject of the contemplated
requisition. How small a part the necessity to supply water to these buildings
played in creating the need to provide the new trunk main is indicated by the
minute proportion of the total cost of it that the board thought it equitable
to ascribe to the council as requisitioners in respect of those buildings. That
the 27-in trunk main would serve such other purposes as well in my view
precludes its being a ‘necessary main’ within the meaning of section 37 of the
Water Act 1945. I would answer the only question raised in the originating
summons accordingly, and would allow the appeal.
