Brendon International Ltd v Water Plus Ltd

Hearing date: 30 November 2023

Approved Judgment

This judgment was handed down remotely at 10 a.m. on Friday 8 March 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This appeal concerns a restitutionary claim (“the Claim”) by the Respondent (“Brendon”) for repayment of over £150,000 in fees that it had paid for sewerage services dating back to 2000. Between September 2000 and June 2016, about £120,000 was paid to the Second Appellant (“United Utilities”), and from June 2016 until September 2019, about £30,000 was paid to the First Appellant (“Water Plus”). United Utilities has at all material times been the relevant “sewerage undertaker” with responsibility for the system of public sewers. However, in June 2016 it transferred its non-household business to Water Plus, which thereafter became its “sewerage licensee” and was entitled to charge for the provision of sewerage services to commercial entities.

The basis for the charging of such fees was that surface water from Brendon's commercial premises (the “Premises”) on the Sankey Valley Industrial Estate in Newton-Le-Willows (the “Estate”) flowed into a sewer that was a “public sewer” as defined in the Water Industry Act 1991 (“the WIA 1991”). The central issue between the parties in the Claim was whether the sewer in question was indeed a public sewer or not.

In a reserved judgment delivered after a three-day trial, [2022] EWHC 3321 (Ch), (the “Judgment”), HHJ Cadwallader (the “Judge”) held (i) that United Utilities and Water Plus had not discharged the burden of showing that the sewer into which the surface water from the Premises drained was a public sewer; (ii) that they had not been entitled to charge fees for surface water drainage services, and that the payment of such fees by Brendon had been made under a mistake, giving rise to a restitutionary remedy; and (iii) that no part of Brendon's claim was barred by limitation.

United Utilities and Water Plus appeal against the first and third parts of the Judge's analysis pursuant to permission granted by Arnold LJ. In essence they contend that the Judge was wrong to place the burden of proving that the sewer in question was a public sewer on them, and that he applied the wrong test for limitation. They also contend that the Judge was wrong to exclude some of the evidence of one of their witnesses at the trial.

The legislative framework in outline

Every sewerage undertaker appointed to a particular area under the WIA 1991 has a general duty under section 94 to provide, improve, cleanse and maintain a system of public sewers so as to ensure that its area is effectively drained.

Section 219(1) of the WIA 1991 contains a definition of a public sewer. It provides,

“In this Act, except so far as the context otherwise requires –

“ public sewer” means … a sewer for the time being vested in a sewerage undertaker in its capacity as such, whether vested in that undertaker by virtue of a scheme under Schedule 2 to the Water Act 1989 or Schedule 2 to this Act or under section 179 above or otherwise, and “ private sewer” shall be construed accordingly;”

There are a variety of means by which, over the years, and under successive Acts, a sewer might have become vested in a sewerage undertaker. The Judge set these out in his Judgment at [31]–[39]. They can be summarised as follows:

i) From the commencement of the Public Health Act 1875 to the commencement of the Public Health Act 1936, save for certain statutory exceptions, all existing and future sewers vested in local authorities, which performed the functions of sewerage undertakers.

ii) Under the Public Health Act 1936, sewers previously vested continued to vest in the local authorities, and new sewers vested if either the local authority constructed them or adopted them. Adoption was a new procedure which allowed an undertaker to declare that a previously private sewer was now public (either by agreement with the relevant landowner or following an appeal by the landowner to what is now Ofwat); or which allowed an undertaker to agree to adopt a sewer on completion of its construction by a developer.

iii) Under the Water Act 1973 the responsibilities of undertakers were transferred from local authorities to new regional water authorities, in whom sewers vested. The water authorities were, however, required to put in place arrangements for their sewerage functions (including constructing and adopting sewers) to be carried out by the new district councils established under the Local Government Act 1972.

iv) The Water Act 1989 privatised the water industry. All sewers previously vested in the regional water authorities transferred to the new sewerage undertakers, which were private companies, who also had the right to construct or adopt new sewers.

v) The regime established under the Water Act 1989 continued under the WIA 1991. In particular, section 179(1) WIA 1991 provided (subject to certain exceptions and extensions) that every sewer or lateral drain laid by a sewerage undertaker in exercise of any power conferred under the relevant Part of the Act, or otherwise, should vest in the undertaker that laid it. In addition, the WIA 1991 also contained provision for local authorities to act as delegates of an undertaker, and provided that if they constructed or adopted a sewer as a delegate of a sewerage undertaker, the sewer would vest in the undertaker.

Under section 106 WIA 1991, members of the public (companies and individuals) have a right to connect drains that carry surface water away from their premises into a public sewer (whether directly or through intermediate drains or sewers).

Under section 142 WIA 1991, the sewerage undertaker in which the relevant public sewer is vested, or its sewerage licensee, is given power to fix charges for services provided in accordance with a charges scheme under section 143 WIA 1991 or in accordance with an agreement with the person to be charged. As regards sewerage charges, section 144(1)(b) WIA 1991 provides,

“(b) sewerage services provided by a sewerage undertaker shall be treated for the purposes of this Chapter as provided to the occupiers for the time being of any premises which —

(i) are drained by a sewer or drain connecting, either directly or through an intermediate sewer or drain, with such a public sewer of the undertaker as is provided for foul water or surface water or both; or

(ii) are premises the occupiers of which have, in respect of the premises, the benefit of facilities which drain to a sewer or drain so connecting.”

A sewerage undertaker is obliged by section 199 WIA 1991 to maintain a record of the location and other relevant particulars of every public sewer vested in the undertaker, and to make available that information to the public in the form of a map. The sewerage undertaker does not, however, have to keep records of a sewer laid before 1 September 1989 if it has no reasonable grounds for suspecting the existence of the sewer, or if it is not reasonably practicable for it to discover the course of the sewer and it has not done so.

The facts in outline

For present purposes, the outline of undisputed facts can be shortly stated.

The Estate was constructed at some time between 1990 and 2000, and Brendon's Premises were constructed on the Estate between about 1998 and 2000.

After it moved into the Premises, Brendon was initially charged for both foul sewerage and surface water drainage services by United Utilities which was the sewerage undertaker for the area. In about 2004 Brendon complained to United Utilities that its foul sewerage was in fact connected to a septic tank and did not flow into any public sewer, and it was refunded the charges for foul sewerage.

Thereafter, Brendon continued to be charged and to pay charges for surface water drainage services. At this time, the map record maintained by United Utilities in accordance with the WIA 1991 did not show any public sewers on or serving the Estate. Various statements were also made by United Utilities to St. Helens Council and other entities over the next decade to the effect that there were no public sewers serving the properties on the Estate.

From about 2013 United Utilities made various entries and alterations to its internal records to show a surface water drainage pipe on the Estate. From time to time that pipe was variously designated in those internal records as a private sewer or a public sewer, but no change was made to the map recording the public sewer system maintained by United Utilities.

In 2014 and 2015, a firm of consultants (“Cadantis”) pursued refunds of surface water drainage charges from United Utilities on behalf of a number of occupants of the Estate (not including Brendon). In February 2016 United Utilities accepted that Cadantis' clients on the Estate were not connected to a public sewer and made refunds to them.

Water Plus took over the provision of retail services to Brendon from United Utilities on 1 June 2016 and continued to charge Brendon for surface water drainage services.

In January and February 2018 a survey conducted by a contractor on behalf of United Utilities...