Boots UK Ltd v Severn Trent Water Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeDaniel Toledano
Judgment Date17 January 2018
Neutral Citation[2018] EWHC 53 (Comm)
Docket NumberCase No. CL-2017-000088
Date17 January 2018

[2018] EWHC 53 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES

COMMERCIAL COURT (QBD)

Before:

Daniel Toledano Q.C.

(SITTING AS A DEPUTY HIGH COURT JUDGE)

Case No. CL-2017-000088

Between:
Boots UK Limited
and
Severn Trent Water Limited

Jonathan Davies-Jones Q.C. and Christopher Bond (instructed by DLA Piper UK) for the Claimant

Simon Colton Q.C. (instructed by Eversheds Sutherland) for the Defendant

Hearing dates: 19/20 December 2017

Daniel Toledano Q.C.:

Introduction

1

This is an application for summary judgment under CPR Part 24 issued by the Defendant (“Severn Trent”) against the Claimant (“Boots”) on the basis that the claimant has no real prospect of succeeding on the claim and there is no other compelling reason why the case should be disposed of at trial.

2

The application raises a question of law concerning Severn Trent's entitlement to charge Boots on the basis that it did over the period 1996 to the present in relation to the discharge of trade effluent from Boots' property in Beeston, Nottingham (the “Property”). The answer to this question turns on the correct interpretation of the definition of “ trade effluent” under the Water Industry Act 1991 (the “WIA 1991”) as well as on the correct construction of Severn Trent's schemes of charges issued under the WIA 1991.

3

In addition, this application for summary judgment concerns: (1) whether certain claims in contract and for unjust enrichment based on undue discrimination have no real prospect of success, (2) whether all of the claims prior to 8 July 2010 have no real prospect of success on limitation grounds and (3) whether all of the claims prior to 1 October 1996 have no real prospect of success on the basis of a lack of evidence.

Summary of factual background and claims

4

I have set out in the paragraphs that follow a summary of the factual background to this case and to the claims and defences that have been advanced. This summary is largely based on the Agreed Case Memorandum.

5

Boots is the well-known manufacturer of health and beauty products. It manufactures medical, cosmetic and toiletry products at the Property. Severn Trent is a supplier of water and sewerage services in the Midlands. Its parent company is Severn Trent plc, which was formed in 1989 as part of the privatisation of the water industry. Prior to privatisation, the predecessor of Severn Trent plc was Severn Trent Water Authority (“STWA”), which was formed in 1974 as a state-owned water authority. After privatisation, Severn Trent became the successor to STWA in respect of the provision of sewerage services within its region.

6

Severn Trent (or its predecessor, STWA) has since 1974 supplied water and sewerage services to Boots at the Property. These services include the drainage of surface water including rainfall and the discharge of trade effluent. Severn Trent has charged Boots for surface water drainage either according to the rateable value or to the area of the Property. The discharge of trade effluent has been charged according to the volume recorded by the meter in use from time to time at the Property.

7

The meter used at the Property to measure trade effluent has changed over time. However, it has not been suggested by either side that these changes are material to the issues which the Court is asked to decide. What appears to be common ground, is that at all times the metering and sampling took place at the “D” sump point prior to the discharge of the metered liquid into a private sewer from which the liquid was then discharged into the public foul water sewer.

8

Severn Trent's provision of its trade effluent functions, and the basis on which it may charge Boots for trade effluent discharge at the Property, are subject to a regulatory regime and, from 1991, to the WIA 1991. As described in more detail below, the term “ trade effluent” is defined in section 141(1) of the WIA 1991. Since 1991, Severn Trent's powers to charge Boots for the carrying out of its trade effluent functions are derived from section 142 of the WIA 1991 and, pursuant to section 143 thereof, it has published annual schemes of charges.

9

In this action, Boots alleges that, from 1974 to date, varying quantities of surface water including but not limited to rainwater have been draining through the meter at the Property that measures trade effluent. Severn Trent has included these quantities of surface water in the volumetric charge for trade effluent discharge, while at the same time also charging Boots for the drainage of surface water by rateable value or area. Although Severn Trent does not admit that surface water has passed through and been measured by the relevant meter at any time, it has been assumed for the purposes of this summary judgment application that this was the case. Since the mixing of the surface water with the trade effluent has occurred prior to the discharge of the liquid into the private sewer, it follows that the liquid which is then discharged into the public sewer is necessarily, on Boots' case, a mixed liquid.

10

Boots claims that Severn Trent's charging for the drainage of surface water as if it were trade effluent discharge is and was an ultra vires exaction, in particular having regard to the definition of “ trade effluent” in section 141(1) of the WIA 1991, which Boots says excluded surface water. Boots claims that this overcharging resulted in recoverable payments, being payments within the Woolwich principle and/or payments under compulsion, alternatively severable or divisible payments for a basis which was absent or totally failed. Further, or alternatively, Boots claims that it made payments in accordance with this overcharging in the mistaken belief that it is and was legally obliged to do so; and/or that this overcharging has constituted unlawful discrimination between classes of customers in breach of conditions of Severn Trent's licence. Boots also claims that at all material times Severn Trent supplied trade effluent services to Boots in accordance with a contract, and that this overcharging was a breach of the express and/or implied terms of that contract.

11

Boots seeks restitution of the sums which it claims to have overpaid, estimated to be in the region of £7.8m, on the grounds that Severn Trent has been unjustly enriched at Boots' expense. Boots also seeks damages in the same amount as a result of Severn Trent's breaches of contract.

12

Severn Trent's primary defence to each of these claims is that it was at all times entitled to charge for trade effluent services in the way that it did on one or both of the following grounds:

(1) On a true construction of section 141(1) of the 1991 Act, surface water which passed through and was measured by the meter formed part of the “ trade effluent” discharged by Boots, because it mixed with the liquid produced in the course of Boots' industrial processes, and

(2) Under the Charges Schemes promulgated by Severn Trent since 1996, Severn Trent was permitted to impose trade effluent charges on Boots calculated by reference to a deemed volume taken from the meter installed at the Property, regardless of whether the volume recorded by the meter measured only “ trade effluent” within the meaning of the statute. Further, for the period 1996–2000, the position at the Property was regulated by an Agreement between The Boots Company Plc (“Boots plc”) and Severn Trent which expressly defined trade effluent to include surface water.

13

If either or both of these answers is correct, then Boots would at all times have been legally obliged to pay the trade effluent charges imposed by Severn Trent, and Severn Trent would have been entitled to receive the sums paid to it. In that case, Severn Trent's enrichment would not have been unjust and the restitutionary claims would be bound to fail, as indeed would the contract claims.

14

So far as the contract claims are concerned, Severn Trent contends that no contract existed at any time between Boots and Severn Trent (the 1996 Agreement, and a subsequent Agreement entered into in 2000, being between Boots plc and Severn Trent) and also denies any breach of contract on the basis that the charges levied were lawful.

15

Severn Trent contends that all claims for the recovery of payments made before 8 July 2010 or for damages are time barred by operation of section 5 of the Limitation Act 1980 (“ LA 1980”). In response to this limitation defence, Boots relies on section 32(1)(c) of the LA 1980 in so far as its claims are for relief from the consequences of mistake. Boots also relies on section 32(1)(b) of the LA 1980 and alleges that Severn Trent deliberately concealed from it the fact that the overcharging was unlawful. Boots contends that it could not with reasonable diligence have discovered its mistake, or Severn Trent's deliberate concealment, before 8 July 2010.

History of the statutory and regulatory regime

16

Although the issues before the Court concern the correct interpretation and application of the WIA 1991, it is necessary to set out a short summary of the legislative history in order to set the WIA 1991 in its proper context.

17

The relevant history begins in 1936 with the passing of the Public Health Act of that year (the “PHA 1936”). Section 34 of the PHA 1936 granted a right to owners and occupiers within a district to “ have his drains or sewer made to communicate with the public sewers of [a local] authority, and thereby to discharge foul water and surface water…” However, this right was subject to a proviso which stipulated that the right to drain into public sewers was restricted in a number of ways, two of which are material for present purposes, namely (a)(i) there was no right to discharge into a public sewer any liquid from a factory, other than domestic sewage or surface or storm water, or any liquid from a...

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