The Royal Borough of Kingston upon Thames has lost a Court of Appeal case over the way it charges tenants for water and sewage services in a ruling that affects thousands of properties in the borough and potentially many more across London and the Thames Valley.
The case was brought by council tenant Derek Moss. He argues that Kingston is a “re-seller” of water and sewage services that are supplied to the council by Thames Water. This means that they can only charge him £5 more than it costs them. The council argue that they aren’t reselling, but are collecting bills on behalf of the supplier.
If Moss is right, the council has been overcharging tenants for years. If he is wrong, the council isn’t subject to the cap, and hasn’t been overcharging.
The case could have a significant impact. In 2016 the London Borough of Southwark agreed to repay 48,000 current and former tenants a total of more than £28m after the High Court found it had been overcharging for water and sewerage for more than 10 years.
In a ruling handed down by the Court of Appeal yesterday, a three-judge panel backed the tenant and ruled that Kingston is a resupplier of Thames Water’s series, and therefore has been overcharging.
The case involved an examination of a formal agreement entered into between Kingston and Thames Water in 2003. Many other councils in London and the Thames Valley entered into “near identical” agreements, according to lawyers involved in the case.
“The critical question, then, is whether TWU [Thames Water] has supplied Kingston, directly or indirectly, with a supply of piped water and/or a sewerage service,” Lord Justice Lewison, who wrote the judgment, said in the ruling.
“Kingston argues that it has not. It says that TWU has supplied water directly to the tenants of the various dwellings, and that its own function was merely to collect water charges on TWU’s behalf. Mr Moss, on the other hand, says that under the terms of the agreement, TWU has supplied piped water and sewerage to Kingston; and that he has bought the water and sewerage service from Kingston in the shape of the water charge payable under the terms of his tenancy. He also says that the agreement between Kingston and TWU is one that places the responsibility on Kingston to pay water charges.”
He said that there are “many features of the agreement which, taken together, point unerringly to the conclusion that Thames supplied piped water and sewerage services to Kingston; and that the agreement is one which replaces the liability of the occupier”. Not least, the fact that Kingston is described as ‘the customer’.
“Labels like these are not chosen at random,” he said. “They usually encapsulate the concept that they are intended to represent. If Kingston is the customer, it is the recipient of the provision of a good or service; not merely an intermediary.”
“There is, in my judgment, no real doubt that under the terms of the 2003 agreement TWU supplied water and sewerage services to Kingston, rather than to Kingston’s tenants … It follows that under that agreement Kingston was a re-seller with the meaning of the Water Resale Orders.”
The ruling didn’t direct what should now happen. The council could attempt to challenge the ruling in the Supreme Court or come to an agreement with tenants.
The Mayor & Burgesses of the Royal Borough of Kingston upon Thames v Mr Derek Moss
Mr Ranjit Bhose QC & Ms Ruchi Parekh (Instructed by Sharpe Pritchard LLP) for the Appellant
Mr Martin Westgate QC & Mr Tom Cleaver (Instructed by Deighton Pierce Glynn) for the Respondent
Court of Appeal (Etherton MR, Arnold LJ, Lewison LJ) 27 October 2020
