Canal and River Trust v Thames Water Utilities Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Asplin |
| Judgment Date | 29 June 2016 |
| Neutral Citation | [2016] EWHC 1547 (Ch) |
| Date | 29 June 2016 |
| Docket Number | Case No: HC-2015-003149 |
| Court | Chancery Division |
[2016] EWHC 1547 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane,
London EC4A 1NL
The Hon Mrs Justice Asplin DBE
Case No: HC-2015-003149
Stephen Tromans QC and Catherine Dobson (instructed by Eversheds LLP) for the Claimant
Mark Hapgood QC and Sarah Abram (instructed by BLP) for the Defendant
Hearing dates: 10–12 May 2016
This is a Part 8 claim arising from a long standing dispute between the Claimant, the Canal and River Trust, ("CRT") and the Defendant, Thames Water Utilities Ltd, ("Thames Water") in relation to the abstraction of water from the River Lee.
CRT is the immediate successor to the British Waterways Board which in turn is the successor of the British Transport Commission, the Lee Conservancy Board, the Trustees of the River Lee and before them the "Trustees". CRT is a company limited by guarantee which has charitable status. As a result of clause 2 of the British Waterways Board (Transfer of Functions) Order 2012 and section 105 of the Transport Act 1968 CRT (as successor to the British Waterways Board) is under a statutory duty amongst other things to maintain commercial and cruising waterways. It is concerned with the management of approximately 2000 miles of waterways in England and Wales including the River Lee which rises near Luton and flows into the River Thames near Canning Town in East London. CRT's income is derived from a funding agreement with the Government, licensing of boats and moorings, marinas, utilities including the sale of water, investments, joint ventures and contributions and donations. All of its income is used to meet its statutory obligations.
Thames Water is a private utilities company which is ultimately owned by international institutional investors. It is responsible for the public water supply and treatment of waste water in large parts of the south of England and elsewhere. Over the last five years, Thames Water has extracted approximately a sixth of its annual water supply requirement for London from the River Lee. Thames Water is also the successor to a number of other bodies relevant for this purpose, being the Thames Water Authority, the Metropolitan Water Board, and the New River Company and the East London Waterworks Company, together referred to as the "Two Companies" or the "Metropolitan Water Companies". Thames Water holds two licences to extract water from the River Lee, both of which were granted in September 1966, to which I shall refer in more detail below.
The dispute concerns the amount of the payments which Thames Water is obliged to make to CRT in respect of water it abstracts from the River Lee. Although the statutory regime is complex and the issues numerous, in essence, the Court is required to determine whether: (a) Thames Water is required to make payments by way of either (i) contribution to the cost of management of the River Lee as a waterway, or (ii) consideration at the market value for the water extracted from the River Lee, which it is alleged that CRT would otherwise be able to sell to others; and (b) to determine whether there is any basis other than under the River LeeWater Act 1855 (the "1855 Act") upon which Thames Water is obliged to make the payments. As the issues turn for the most part upon statutory construction and are dependent upon the historical statutory context, I will set out the relevant legal background and statutory framework first.
Common Law and Statutory Background
Regime prior to 1963
It is common ground between the parties that although it is possible to own water contained, for example, in a reservoir, there is no right under the common law to the water from time to time flowing in a natural watercourse. Such rights can only be created by statute. The statutory history of the abstraction of water from the River Lee is long and somewhat convoluted. Whilst relevant legislation dates back to at least the seventeenth century, the first statutory provisions with which the present dispute is directly concerned are contained in the Lee Navigation Improvement Act (the "1850 Act"). By section 3 of that Act, the Trustees of the River Lee were incorporated.
Prior to the 1850 Act the Two Companies had certain rights to take water from the River Lee in exchange for payment to the Trustees. The Preamble to the 1850 Act provides amongst other things that the Trustees from time to time had effected improvements to the navigation of the River Lee and that it would be of public advantage if they were authorized further to improve the same, and to sell and dispose of the surplus water. The 1850 Act itself contained detailed provisions and powers concerning the improvement of navigation, construction of locks and the like and other necessary works. Section 68 of the 1850 Act provided that:
"… it shall be lawful for the Trustees from Time to Time to contract and agree, either permanently or for a stated period, with any waterworks company… to supply with water the cities of London and Westminster [or various other areas]… for the purchase and taking by such waterworks company… of so much of the water flowing into or down the River Lee as such waterworks company… may agree to purchase and take…"
Although there was further legislation relating to the Two Companies in the meantime, the next relevant statute is the 1855 Act. The 1855 Act was described in its title as: "An Act for transferring Part of the Property and Powers of the Trustees of the River Lee …" It was recorded in the lengthy Preamble amongst other things that: the Two Companies derived large quantities of water from the River Lee for their respective waterworks and were executing extensive and important works to prevent fouling of the water and expending large sums on the same; the Trustees of the River Lee had the power under the 1850 Act to supply water in bulk to water companies authorized to supply water to London; it was of great importance that the water supplied was of good quality; under the Metropolis Water Act 1852 obligations involving a large outlay for the purpose of increasing the quantity of water available, had been imposed upon the Two Companies; there was a dispute between the New River Company and the Trustees as to whether it had a right to take from the River Lee the water passing through the Gauge as defined in the 1850 Act; and that the New River Company had agreed to compromise its claim by agreeing to take 2,500 cubic feet a minute from the Gauge.
The thirteenth, fourteenth and fifteenth recitals are in the following form:
"Thirteenth Recital
And whereas it would conduce to the Advantage of the Inhabitants of the Metropolis who derive their Water Supply from the Two Companies respectively if the Quantity of the Water of the River Lee to which the Trustees and the Two Companies respectively are to be hereafter entitled were defined, and if the whole of the Water from Time to Time flowing into and down the River, except such Quantities thereof as are by this Act reserved to the Trustees for the Purposes of the Navigation, and such of the Powers of the Trustees with respect to such Water as in this Act expressed, were transferred to and vested in the Two Companies respectively, and if Provision were made for the Improvement of the Navigation of the River, and for the Repair of the River, and for husbanding the Water and preserving it from Pollution, and for enabling such further Improvements of the River and the Navigation to be from Time to Time made as may better enable the Two Companies respectively to comply with the Provisions of the "Metropolis Water Act, 1852";
Fourteenth Recital
And whereas the New River Company now pay to the Trustees for a Supply of Water the yearly sum of One thousand eight hundred and fifty Pounds, and the East London Company now pay to the Trustees for a Supply of Water the yearly Sum of Two hundred and fifty Pounds, and the last-named yearly Sum is liable to be increased, under the Provisions of the Trustees Act of 1850;
Fifteenth Recital
And whereas the Two Companies respectively are willing, in return for such Transfer to them, to pay to the Trustees, as by this Act provided, in lieu of those yearly Sums of One thousand eight hundred and fifty Pounds and Two hundred and fifty Pounds respectively, and any Sums by way of Increase thereof, the aggregate yearly Sum of Three thousand five hundred Pounds and the Principal Sum of Forty-two thousand Pounds, and the Trustees are willing to accept Payment thereof accordingly, and that such Transfer should be made accordingly; and it is expedient that the Provisions in that Behalf of this Act be made;"
By section 4 of the 1855 Act the liability to pay the sums previously paid to the Trustees by each of the Two Companies ceased absolutely. Section 5 provided for the payment of an aggregate yearly sum of £3,500 and a single capital sum of £42,000 to be paid to the Trustees. Its terms are central to the present dispute and is in the following form:
"The Two Companies shall pay to the Trustees, as by this Act provided, the aggregate yearly Sum of Three thousand five hundred Pounds, and the New River Company shall pay to the Trustees, as by this Act provided, the gross Sum of Forty-two thousand Pounds: Provided always, that as between the Trustees on the one hand and the Two Companies on the other hand, that aggregate yearly Sum shall be paid to the Trustees, as to the yearly Sum of One thousand five hundred Pounds, Part thereof, only by the New River Company, and as to the yearly Sum of Two thousand Pounds, Residue thereof, only by the East London Company: Provided also, that as between the Two Companies that aggregate yearly Sum shall be paid by them in such Proportions...
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