Boots UK Ltd v Severn Trent Water Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Eleanor King,Lord Justice Lewison,Lord Justice David Richards
Judgment Date13 December 2018
Neutral Citation[2018] EWCA Civ 2795
Date13 December 2018
Docket NumberCase No: A3/2018/0689

[2018] EWCA Civ 2795

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Mr Daniel Toledano QC (Sitting as a Deputy Judge of the High Court)

[2018] EWHC 53 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Lewison

Lady Justice King

and

Lord Justice David Richards

Case No: A3/2018/0689

Between:
Boots UK Limited
Claimant/Appellant
and
Severn Trent Water Limited
Defendant/Respondent

Jonathan Davies-Jones QC and Christopher Bond (instructed by DLA Piper UK LLP) for the Claimant/Appellant

Simon Colton QC (instructed by Eversheds Sutherland (International)) for the Defendant/Respondent

Hearing date: Wednesday 5 th December 2018

Approved Judgment

Lord Justice Lewison
1

Boots UK Ltd operates a factory at Beeston where it manufactures medical, toiletry and cosmetic products. The site is bordered by the Beeston Canal to the south east; and stands on a flood plain some 500 metres from the river Trent. There are three designated surface water outlets from the site. One discharges into a brook and thence into the river Trent. The second discharges via a dyke into the Beeston Canal. The third passes through a surface water sewer.

2

The manufacturing processes give rise to trade effluent which is discharged into a private sewer. Before the effluent is discharged into that private sewer it is metered. There has been two metering points. One is called the “D-sump” discharge pipe; and the second was a chemical trade effluent discharge pipe. However, it is to be assumed for the purposes of this appeal that before the trade effluent reaches the meter it is mixed with surface water consisting principally of rainwater, which has not been discharged via the three discharge points for surface water. The meter measures the mixed liquid which is then discharged into a public foul water sewer. Severn Trent Water Ltd is the supplier of water and sewerage services. It levies charges in two ways. First, it applies a charge to the metered volume of mixed liquid passing through the meter. Second, it levies a charge for the drainage of surface water by rateable value or area. It claims to be entitled to levy trade effluent charges on the entirety of the mixed liquid either (i) because the total volume of that liquid is “trade effluent” as defined by statute; or (ii) because it is deemed to be so in consequence of Severn Trent's charging scheme; or (iii) because it is deemed to be so under contractual arrangements between it and Boots. Boots alleges that it is not entitled to levy metered charges on the whole of the mixed liquid, but only on that part which is trade effluent; and claims reimbursement of what it alleges to have been substantial overpayments stretching back over many years. Mr Daniel Toledano QC gave summary judgment in Severn Trent's favour; but gave Boots permission to appeal. His judgment is at [2018] EWHC 53 (Comm), [2018] PTSR 1245.

3

The appeal potentially raised two issues:

i) Is the mixed liquid “trade effluent” as defined by section 141 (1) of the Water Industry Act 1991?

ii) If not, is it deemed to be trade effluent as a consequence of the charging scheme or contractual arrangements between Boots and Severn Trent?

4

In order to succeed on this appeal, Boots needed to win on both points. We heard argument on the first of these issues; at the conclusion of which we announced our decision to dismiss the appeal with reasons to be given later. These are my reasons for joining in that decision.

5

Between [16] and [26] the judge set out the history of legislation relating to the supply of water and sewerage services, culminating in the legislation passed in 1991. Severn Trent's power to fix, demand and recover charges is limited to doing so either (i) under an agreement with its customer or (ii) under the relevant annual Charges Scheme. From 1999 until 2015, such a Scheme had to be approved by the Water Regulation Authority (“OFWAT”) before it can take effect. Although Boots' claim in part predates the Water Industry Act 1991, that Act was a consolidation Act which did not change the previous statutory law in any material way. It is convenient, then, to deal with the statute in its current form.

6

Section 106 (1) gives an owner or occupier of premises the right to connect his drains or sewers to the public sewers and thereby to discharge foul water and surface water from those premises. Section 106 (2) provides that:

“(2) Subject to the provisions of Chapter III of this Part, nothing in subsection (1) above shall entitle any person—

(a) to discharge directly or indirectly into any public sewer—

(i) any liquid from a factory, other than domestic sewage or surface or storm water, or any liquid from a manufacturing process; or

(ii) any liquid or other matter the discharge of which into public sewers is prohibited by or under any enactment; or

(b) where separate public sewers are provided for foul water and for surface water, to discharge directly or indirectly—

(i) foul water into a sewer provided for surface water; or

(ii) except with the approval of the undertaker, surface water into a sewer provided for foul water.”

7

Chapter III is the part of the Act that deals with trade effluent. Section 118 provides that the occupier of trade premises may discharge trade effluent into a public sewer with the consent of the relevant undertaker; and disapplies section 106 (2) (a) and (b) to the lawful discharge of trade effluent. An application for consent to discharge trade effluent is made by notice: section 119. Section 121 gives a sewerage undertaker wide powers to impose conditions on a consent. If a person is aggrieved either by a refusal to grant consent, or by conditions attached to a consent, he may appeal to OFWAT: section 122. OFWAT has wide powers to review conditions and to substitute its own. “Trade effluent” is defined by section 141 (1) which provides:

“trade effluent” –

(a) means any liquid, either with or without particles of matter in suspension in the liquid, which is wholly or partly produced in the course of any trade or industry carried on at trade premises; and

(b) in relation to any trade premises, means any such liquid which is so produced in the course of any trade or industry carried on at those premises,

but does not include domestic sewerage”

8

This definition has formed part of the statutory scheme for regulating sewerage services since 1937: Public Health (Drainage of Trade Premises) Act 1937 s. 14.

9

As the judge correctly said, the question on this issue is whether a liquid which contains a mixture of the product of trade or industry and surface water constitutes trade effluent within the meaning of the statutory definition. At [53] the judge set out the approach he would adopt to the interpretation of the statute. Mr Davies-Jones QC, on behalf of Boots, did not criticise anything that the judge had said in that respect; although he showed additional materials which would support the judge's distillation of principle. Since it is common ground that the judge was correct in setting out the principles, it is not necessary to do more than to repeat the relevant parts of his summary:

“(1) In construing the definition, the court must strive to give it a “fully informed construction”. (2) That requires the court to have regard to the “context” of the statutory provision as well as to its terms. (3) The “context” of a statutory provision includes its legislative history, its statutory purpose and other Acts in pari materia. (4) The court must also have regard to the consequences of rival constructions. (5) The court should presume that the legislator did not intend a construction which would operate unjustly or anomalously and did intend one which promotes consistency in the law.”

10

Mr Davies-Jones argued that the judge had adopted a literal interpretation of the definition, rather than an informed or contextual interpretation. He had not correctly applied the principles that he said he would adopt. Since the 1930s the statutory scheme for regulating sewerage and drainage has maintained a clear distinction between three distinct and mutually exclusive types of effluent: domestic sewage, surface water and trade effluent. Until 1937 a person had a right to discharge foul water and surface water into public sewers; but had no right to discharge trade effluent (although a local authority had a limited duty to permit the discharge of trade effluent into public sewers). The 1937 Act was designed to confer a right to discharge trade effluent which had not existed before. It was not designed to alter the law as regards foul water or surface water. Since then trade effluent has been treated as a separate category of effluent. Each of these mutually exclusive categories gives rise to separate rights of discharge.

11

This threefold classification is replicated in the 1991 Act. Section 106 (1) gives the owner or occupier of premises the right to have his drains or sewer communicate with a public sewer and thereby to discharge “foul water and surface water”. However, section 106 (2) (a) provides that that right does not entitle any person to discharge “any liquid from a factory, other than domestic sewage or surface or storm water, or any liquid from a manufacturing process.” These two sub-sections mirror that threefold classification. It follows from this threefold classification, he said, that the mixed liquid should be treated as composed in part of trade effluent and in part of surface or storm water. Boots already had a right to discharge surface water into the public sewer under section 106, and section 141 should not be construed so as to remove that right. The only purpose of the regime for the discharge of trade effluent was to create a “carve out” from what had been the...

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