Ministry of Defence v Thames Water Utilities Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 19 January 2006 |
| Neutral Citation | [2006] EWHC 66 (TCC) |
| Docket Number | Case Number: 5 BM 50011 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 19 January 2006 |
[2006] EWHC 66 (TCC)
IN THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
Birmingham Civil Justice Centre
33 Bull Street
Birmingham B4 6DS
Her Honour Judge Frances Kirkham
Case Number: 5 BM 50011
Mr Jeffery Onions QC of Counsel (instructed by Wragge & Co LLP) for the Claimant
Mr Vincent Nelson QC of Counsel (instructed by Thames Water) for the Defendant
I am obliged to Mr Onions QC and Mr Nelson QC for their assistance with this case.
The defendant, Thames Water Utilities Ltd (“TW”) is a statutory water and sewerage undertaker pursuant to the Water Industry Act 1991 (“the Act”). The Act consolidated the relevant provisions of the Water Act 1989. The 1991 Act sets out the powers and duties of Water and Sewerage Undertakers. Those functions are subject to the supervision and control of the Director General of Water Services (“the Director”). The claimant, the Ministry of Defence (“the MoD”) is a customer of TW.
This case concerns the way in which TW calculate the charges they make for sewerage and waste water services, namely on the assumption that the volume of potable water at the point of entry to a site is equal to the volume of water discharged into the sewer, even if it could be demonstrated that in fact a smaller volume was discharged.
The MoD seeks to recover overpayments it claims to have made to TW in respect of waste water or sewerage charges. The MoD's claim is for the repayment of what it contends are overpayments of monies paid as the result of a mistake, namely an incorrect assumption on the part of the MoD that the volume of sewage discharged was equivalent to the volume of potable water in. The MoD began proceedings in February 2005. They claim repayment of sums in excess of £1 million paid to TW for sewerage charges in respect of eight different army barracks: St John's Wood (for the period 1996–2001), Chelsea, Cavalry, Combermere (all for the period 1996–2002) Princess Royal (1998–2002) Dalton (2000–2003) Keogh (2002–2004) and Woolwich (1998–2004). These eight barracks are served by TW and South East Water. (For the purposes of this trial, reference need be made only to TW.)
The MoD claim that between 1 April 1996 and 15 October 2004 they paid quarterly invoices rendered by TW. They paid the charges in full on the understanding that they were paying for a service provided by TW in the volume for which it was being charged. In December 2001 the MoD appointed Waterlink (a division of Mid-Kent Water Plc) to carry out investigations into water and waste water usage at the barracks. Investigations were carried out. The MoD claim that the results of those investigations established that a significant volume of water entering the various sites was not returning as waste water to the sewers. It was being lost to ground through pipe leakage. This, the MoD claim, was unknown to them at the time they paid the charges in full.
TW do not suggest that there is no basis for the MoD's common law restitutionary claim. TW now contend that the court does not have jurisdiction to try the case. Subject to that, TW contend that they are entitled to charge as they do. TW levy charges pursuant to charges schemes they put in place from time to time. In issue is whether their approach to charging is contrary to sections 142 and 143 of the Act if it can be shown that there was, in fact, no equality between volume of water in and volume of waste water out.
Where the water supply to any particular site is metered, TW calculates its sewerage waste water charges for that site by reference to section 5 of its various charges scheme, namely by reference to the volume of potable water recorded on the revenue meter at the time it enters the site. For the purposes of its charges scheme, TW assumes that the volume of potable water recorded at the point of entry to a site is equal to the volume of water being discharged into the sewer. TW calculates the cost for waste water services on the basis of this assumed volume.
By order dated 17 June 2005 the court ordered trial of preliminary issues. The issues to be determined were revised by order dated 2 December 2005. The trial of the revised preliminary issues took place on Monday 19 December 2005. At trial, TW indicated that it did not pursue the case it made at paragraph 15.1.1.2 of its defence. Accordingly, preliminary issue numbered 2 does not fall to be decided.
By their defence, served in March 2005, TW contend that sections 142 and 143 impose a general statutory duty on TW to fix charges, compile and publish an annual charges scheme for the services it is appointed to provide pursuant to the provisions of the Act and set out in the instrument of appointment. Neither, whether implicitly or explicitly, TW contends, provides that TW may charge only for services it actually provides to each individual customer.
In their discretion, TW grant a leak allowance. They do so by means of an adjustment of the charges set out in their invoices. At paragraph 15.1.2 of their defence, TW set out their approach to rebates. Where TW are satisfied that more than 10% of waste water has not been discharged to a public sewer, the abated quantity, for the purposes of calculation of the future charge to the customer, is reduced from the date on which this is brought to TW's attention. On a proper construction of the charges scheme, TW contend, no retrospective rebate is payable in respect of past periods when there was no discharge to the public sewer. Further, they say that, on a proper construction of the charges scheme, the abated quantity is to be used in the calculation for future charges only where the customer deliberately uses, in whole or in part, some method of discharge other than into the public sewer. The customer is not entitled to a reduced future charge in respect of non-discharge to the public sewer where such discharge is as a result of leakage of waste water from the customer's pipes which would otherwise discharge into public sewers provided by TW. Even if (contrary to TW's case) the charges scheme does provide for an abatement of charges for waste water leakage, TW contend that any such reduction should be from the date on which such discharge was brought to their attention, so that any reduction would not be retrospective but would be only in respect of any leakage taking place after notification to TW.
TW did not advance at trial a case whereby they relied on section 143 (3A) which requires them to cause the cost of public sewers to be borne by their customers generally.
The MoD's case is that TW's entitlement to charge for its waste water services is limited by statute. Pursuant to sections 142 and 143, TW do not have the statutory power to charge for a service that they do not provide. By virtue of those sections, TW's charges should have been calculated by reference to the volume of waste water services actually provided by TW. In demanding payment and/or retaining the benefit of an overpayment for a service which it did not provide, TW are in breach of sections 142 and 143. A charges scheme which allows an undertaker to charge for services not actually provided is not in accordance with the proper construction of the Act. To allow otherwise would be unjustly to enrich TW.
On 16 November 2005, the MoD served a request for further information. TW provided some information in response to that request on 30 November 2005 and provided further information on 12 December 2005. By their 12 December replies, TW indicated (for the first time in these proceedings) that their case was that, pursuant to section 18(8) of the Act, MoD's sole remedy is to refer to the Director for an enforcement order. TW now contend that this court does not have jurisdiction to decide this dispute. TW have made no application for an extension of time to comply with the provisions of CPR Part 11. They have served no amended pleading. Mr Nelson QC submits that, following Joseph Crosfield & Sons Ltd v Manchester Ship Canal Company [1904] Ch 123 (CA), that is not necessary: the court will treat the pleaded case as amended to plead the point. Mr Onions QC accepts that, if section 18(8) does indeed provide an exclusive code for resolution by the Director, then the court should not determine these issues: there is clear authority for that. MoD's case is that TW's position is misconceived, and the court does have jurisdiction.
Plainly, the parties cannot confer jurisdiction upon the court and there can be no question of acceptance of jurisdiction (eg by acquiescence) where none lies. TW's raising this issue at such a late stage may well have costs consequences, but the point having been raised, however late, it is one which the court must decide. At the trial I heard submissions first on the jurisdiction point. Mr Onions QC and Mr Nelson QC accepted my invitation to go on to make submissions on the substantive issues, in order to dispose of matters in the most efficient way. Submissions on both jurisdiction and substantive issues were completed in one day. In this judgment, I deal with both jurisdiction and the substantive issues.
There is no relevant agreement between the parties as to the charges which TW are entitled to levy.
Relevant provisions of the Act are as follows.
Section 2(3)(a) requires the Director to perform his powers and duties, among other things, “in the manner that he considers is best calculated (a) to ensure that the interests of every person who is a customer or potential customer of the company…are protected as respects the fixing and recovery by that company of water and drainage charges…”. He is also required by section 2(2) to secure that…relevant undertakers are able (in particular, by securing reasonable returns on their capital) to finance...
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Hanifa Dobson and Others v Thames Water Utilities Ltd and The Water Services Regulation Authority
...that would mean that hardly any claim could be brought under s. 18(8). The Claimants rely on the judgment of Moses LJ in Thames Water Utilities v. Ministry of Defence [2006] EWCA Civ 1620 (B5/4) at para. 50 as showing that claims for restitution could be brought and, in such a case would h......
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