Water Act 1945–Charges for supply of water for private housing developments–Question as to liability of developers to contribute to cost of necessary main under section 37 of Act–Effect of House of Lords decision in Cherwell District Council v Thames Water Board considered–Whether cost of laying new distribution main should fall on developers or on general body of water ratepayers–Developers chargeable under section 37 not entitled to relief given to consumers in respect of costs of additions and improvements–Developers liable to contribute to cost in respect of larger of two developments, but not liable, by reason of special agreement, in respect of smaller development
In this action
the plaintiffs, Royco Homes Ltd, of Chapel Street, Marlow, Bucks, sought declarations
against the defendants, the Southern Water Authority, in respect of the supply
of domestic water for proposed residential developments at Chilton Manor Estate
and Milton Church Farm Estate near Sittingbourne in Kent. Chilton was a
comparatively small site involving 363 proposed houses. Milton was much larger,
being an estate planned for 2,200 houses, but in respect of which outline
planning permission had so far been received for 700 only; the remaining 1,500
houses were unlikely to be built for some time owing to delays in the road
programme.
The
declarations sought by the plaintiffs were to the following effect:
(1) that the plaintiffs were entitled to receive
a supply of domestic water for the Chilton development from a 150-mm main
constructed by the defendants for a council housing development (in fact by the
time of the trial of this action such a supply was already being received);
(2) that if the defendants constructed a further
main to provide additional water-carrying capacity at Chilton they could not
lawfully demand a contribution from the plaintiffs in respect of such further
main;
(3) that the defendants could not lawfully demand
from the plaintiffs a contribution in respect of a proposed 200-mm main from a
point outside the Milton development site to the action area of which the
Milton site formed part; and
(4) that the plaintiffs were entitled to
repayment with interest of a sum of £16,000 paid by them under protest as a
deposit in respect of the cost of laying the above 200-mm main.
John
Drinkwater QC and B Payton (instructed by Harold Benjamin & Collins)
appeared on behalf of the plaintiffs; W D Ainger (instructed by Barlow, Lyde
& Gilbert) represented the defendants.
Giving
judgment, FORBES J said that the supplies of water in the Sittingbourne area
came from at least four different service reservoirs whose top water levels
varied. There were therefore different pressures in different parts of the
system. It was an area in which considerable development had taken place and
many of the existing mains were over-committed. He proposed to consider
separately the position in regard to each site.
The
Chilton Development
A special
issue arose in relation to the 150-mm main laid partly across land now
belonging to the plaintiffs in connection with a council housing development.
The plaintiffs contended that there was either a contract that this main would
be available to serve the plaintiffs’ own development or that at least the
defendants were estopped from denying its availability. Having reviewed the
correspondence between the parties, his Lordship found that the defendants were
bound by contract to allow the main in question to serve not only the council’s
development, but the plaintiffs’ as well. In so far as the defendants were now
seeking to bring water to Chilton Manor for the purpose of serving the
plaintiffs’ site by some other means, the defendants were in breach of contract
and could not take advantage of that breach to claim the cost of so bringing
water to the site. The plaintiffs were therefore entitled to the declaration
sought in paragraph 2 of the prayer.
The Milton
Development
As regards the
Milton development, the water authority proposed to lay a new length of 200-mm
main for a distance of about 3.5 km to the site. The plaintiffs were asked to
pay an immediate deposit of £16,500 as a contribution to the cost and they did
in fact pay £16,000 without prejudice to their contention that the amount
claimed was not exigible. They now claimed the return of the £16,000.
In order to
supply a development site such as Milton it was necessary to bring water from
some distance away from the site. The plaintiffs contended that, although they
must pay for any necessary mains on the site, they were required by section 37
of the Water Act 1945 only to pay the cost of an off-site main from the
boundary of the site to the nearest point off-site where a distribution main
existed. This, they submitted, was so whether or not the size of that main was
appropriate for such a connection or whether the main was so over-committed
that there was insufficient water in it to supply the Milton Site. They argued
that if it were necessary to supplement the supply the cost must fall on the
water authority. Reliance was placed on the decision of the House of Lords in Cherwell
District Council v Thames Water Board [1975] 1 WLR 448. The
defendants on the other hand contended that, if the mains in the vicinity of
the site were over-committed, the water authority was entitled to lay a
distribution main from some other point in the supply system acceptable in
engineering terms and that the cost of laying any off-site main from that point
to the site must be defrayed by the developer. The defendants challenged the
application of the Cherwell decision to the present case and reserved
the right to attack that decision, if necessary, before the House of Lords
itself.
After
reviewing the relevant provisions of the Water Act 1945, including section 37,
and referring to the speech of Lord Diplock in the Cherwell case, his Lordship
said that the ordinary owner or occupier was not required to make any
contribution to capital costs other than to defray the cost of the service pipe
which served his individual premises. In other words he was not responsible for
the capital cost of any mains, whether ‘necessary’ or otherwise. He had,
however, to pay the appropriate water rate. Developers, on the other hand, were
responsible under section 37 for defraying the capital cost of necessary works
to the extent laid down in that section. The Act did not treat the developer as
a consumer, but singled him out as the only person who could be called upon to
make any payment relating to the capital cost of mains or reservoirs. Lord
Diplock in his speech in the Cherwell case referred to the principle
that a consumer was not to pay for additions and improvements even if caused by
the extra demand for water due to his own connection with the system. Lord
Diplock was there referring to consumers, ie to those who paid water rates, but
‘section 37 parties’ did not as such pay water rates. There was nothing in the Cherwell
case to prevent the cost of additions or improvements from falling on a section
37 party–a developer–so long as these additions or improvements were
‘necessary’ reservoirs or mains.
In the present
case the engineering evidence left no doubt that there was no point nearer to
the Milton site at which an adequate supply of water existed than that selected
by the defendants. Nor was there any evidence that the size or route of the
proposed main (or anything else about it) invalidated its character as a
‘necessary’ main within Lord Diplock’s explanation of that term in Cherwell.
It was suggested that a section of the main could be used to supply a
particular village with water, in addition to supplying the plaintiffs’ site,
but there was no evidence that the authority had any intention to do so.
His Lordship’s
conclusions were as follows:
(a) A necessary main (or service reservoir) was
one which could be said to be necessary for the purpose of conveying water from
the existing distribution system to the developer’s site and, within it, to
points suitable for giving individual supplies.
(b) The point on the existing distribution system
from which the new main took its departure was not ineluctably the nearest
point on that system to the developer’s site; it was the point from which, in
accordance with proper water engineering practice, it was possible to charge
the main with sufficient water to supply the proposed development. In this
connection, it had to be remembered that the appropriate point might be one on
a trunk main, and the ‘necessary’ works might, therefore, include a trunk main
from this point to a service reservoir as well as the reservoir itself and the
distribution main from there on to and within the site.
(c) The size and the route of the main must be
such as were necessary for that purpose also and not for any other, subject to
this, that the size might take into account the needs of potential consumers
along the route of the pipe.
(d) The fact that once the main was laid the
water in it might be used for some purpose other than supplying the developer’s
site did not of itself mean that the main was not a necessary main; what
governed the matter was the purpose for which the main was laid, and not the
purpose for which the water in it might subsequently be used.
(e) So long as a main was bona fide laid
in accordance with the principles set out in (a), (b) and (c) above, no
theoretical rearrangement (however ingenious) either of the existing
distribution system or of the new works, could serve to vitiate that purpose,
except, presumably, if it can be shown, on the Wednesbury principle [Associated
Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223],
that no reasonable water undertaking could have adopted the original solution.
Applying these
principles to the circumstances of the Milton site, the main proposed by the
defendants was a necessary main within the meaning of section 37 (1) and the
defendants were entitled to recover the appropriate amounts from the plaintiffs
under proviso (a) to that subsection, and to require the deposit under proviso
(b) to be made.
Accordingly,
the plaintiffs were entitled to the declaration numbered (2) in the prayer of
the statement of claim, but were not entitled to the declarations numbered (3)
and (4).
The exact form
of declaration (2) to be agreed by counsel for approval by the judge.
No order made
as to costs.
A certificate
was given under section 12 of the Administration of Justice Act 1969
authorising an application to the House of Lords for leave to appeal direct to
the House, by-passing the Court of Appeal (the ‘leapfrog’ procedure).
