Landlord and tenant – Social landlord – Water charges – Claimant tenant challenging amount charged by defendant landlords for supply of water and sewerage services supplied by Thames water – Whether Water Resale Order 2006 applying to arrangements between defendants and Thames Water – Whether defendants charging amounts exceeding maximum charge allowable – Claim allowed
The defendants were social landlords owning about 52,000 residential properties. Some 37,000 of them were tenanted and not fitted with a water meter. One of those properties, Flat 110 Castlemead, 232 Camberwell Road was let to the claimant under a weekly tenancy. The defendants collected from many of their tenants, including the claimant, charges for water and sewerage services supplied to the properties by Thames Water Authority (later, Thames Water Utilities Ltd).
In 2000, Thames Water (as provider) and the defendants (as customer) entered into an agreement under which Thames Water would provide water and sewerage services to premises managed by the defendants in their capacity as local housing authority and the defendants would pay for the services in respect of some of the premises. In accordance with the 2000 agreement, the practice had been for Thames Water to bill the defendants for the water and sewerage services supplied to “unmeasured premises”.
A question arose whether the Water Resale Order 2006 applied to those arrangements and, if so, whether the defendants had charged tenants more than was permissible under the 2006 Order. The point was important both because the defendants had numerous tenants who could be affected and because it could have implications for other landlords.
The claimant argued that, unless and until varied by a deed in 2013, the 2000 agreement involved Thames Water supplying the defendants with water and sewerage services and the defendants’ tenants buying such services from the defendants. The defendants were hence “re-sellers” within the meaning of the 2006 Order and so were not entitled to recover from their tenants more than the maximum charges set by paragraph 6 of the order and both the 18% “commission” and the 5% “voids allowance” had to be taken into account when calculating those charges. The claimant had thus been overcharged for the water and sewerage services she had received.
In contrast, the defendants said that, on its true construction, the 2000 agreement operated to make the defendants agents of Thames Water, not for it to purchase water and sewerage services from Thames Water. In any case, the claimant had not been overcharged even if the 2006 Order were in point.
Held: The claim was allowed.
(1) Section 142(1) of the Water Industries Act 1991 empowered Thames Water to demand and recover charges “from any person to whom the undertaker provides services or in relation to whom it carries out trade effluent functions”. On its face, unless there was a relevant agreement to the contrary to which Thames Water was a party, water and sewerage services to tenanted properties were to be viewed as provided to the tenants (as their occupiers), with the result that Thames Water could charge the tenants. However, section 142(2) of the 1991 Act stated the powers conferred on undertakers by section 142(1) were to be exercisable by or in accordance with agreements with the persons to be charged.
On balance, a charges scheme could properly provide for the owner of premises to be chargeable where they were let on a tenancy of less than twelve months or licence. In such a situation, the owner might be said to be a person to whom the undertaker provided services or in relation to whom it carried out trade effluent functions within the meaning of section 142(1)(b), even if the occupier was also to be treated as receiving the services under section 144(1). Where that was so, it would be possible for a scheme to determine which of those to or in relation to whom services were being provided was to be responsible for the charges.
(2) The usual incidents of agency were missing from the 2000 agreement. While there was evidence that the parties sometimes used the word “customer” loosely, the defendants had not come close to demonstrating that “customer” was habitually used in a particular way that could explain a true agent being so described in a formal document. The mere fact that the parties might have referred to their relationship as one of agency and to the defendants collecting water and sewerage charges “on behalf of” Thames Water was of no real importance. Although the 2006 Order might make a sale and re-sale arrangement disadvantageous to the defendants, no Water Resale Order had been made at the date of the 2000 agreement. Until the 2013 deed was executed at least, the relationship between Thames Water and the defendants involved the defendants buying water and sewerage services from Thames Water and re-selling them to their tenants. It followed that that the 2006 Order was applicable: Ex p White, re Neville (1871) LR 6 Ch App 397. Lambeth London Borough Council v Thomas (1997) 30 HLR 89, Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 3 EGLR 119 and Rochdale Metropolitan Borough Council v Dixon [2011] EWCA Civ 1173, [2011] PLSCS 247 considered.
(3) Paragraph 6(2)(b)(i) of the 2006 Order focussed on the “amount payable by the re-seller to the relevant undertaker”. Under the 2000 agreement, the defendants had to pay Thames Water only the net sum obtained by “applying the relevant tariffs, less the allowances and reductions to which the customer was entitled, ie, commission and voids allowance. In the circumstances, unless and until the 2000 agreement was varied by the 2013 deed, the amounts that the defendants were charging the claimant (and other tenants with unmetered water supplies) exceeded the “maximum charge” allowed under the 2006 Order.
Martin Westgate QC (instructed by Deighton Pierce Glynn) appeared for the claimant; Charles Bourne QC and Hannah Slarks (instructed by Southwark London Borough Council Legal Services) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read the transcript of Jones v Southwark London Borough Council