Ministry of Defence v Thames Water Utilities Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Pill,Lord Justice Jonathan Parker,Lord Justice Moses,L |
| Judgment Date | 29 November 2006 |
| Neutral Citation | [2006] EWCA Civ 1620 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 November 2006 |
| Docket Number | Case No: A1/2006/0246 |
[2006] EWCA Civ 1620
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION, TECHNOLOGY
AND CONSTRUCTION COURT, BIRMINGHAM
HER HONOUR JUDGE FRANCES KIRKHAM
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Jonathan Parker and
Lord Justice Moses
Case No: A1/2006/0246
(5BM50011)
MR V NELSON QC & MR B DOHERTY (instructed by Thames Water Utilities, Legal Department) for the Appellants
MR J ONIONS QC (instructed by Messrs Wragge & Co. LLP, Birmingham) for the Respondents
This is an appeal by Thames Water (Utilities) Limited ("Thames Water") against a decision of Her Honour Judge Kirkham on 19 January 2006 sitting in the Technology and Construction Court in Birmingham. It was a trial of preliminary issues in an action brought by the Ministry of Defence (" MoD") to recover alleged overpayments made by them to Thames Water for sewerage services provided. Thames Water is the sewerage undertaker (and also the water undertaker) under the Water Industry Act 1991 ("the 1991 Act") for an area which includes military barracks owned and operated by MoD.
MoD c laim that, between 1996 and 2004, they were overcharged by Thames Water for sewerage services provided at the barracks. The central issue is a straightforward one; is Thames Water entitled to charge for sewerage services at the barracks by reference to the volume of water entering the sites, even though a lesser volume of water may be discharged from the sites to sewers? That issue is, however, overlaid by procedural issues which arise because of the course the litigation has taken. The parties agreed, and asked the judge to resolve, a number of issues on the basis of an agreed statement of facts. The statement of facts provided that leakage occurred from MoD's pipework on site at the barracks so that a lesser volume of water was discharged than was received. The leakages were first notified to Thames Water in about September 2002 and gave rise to the present claim. MoD claims restitution on the basis that invoices were paid under a mistake of fact; MoD did not realise that it was being billed for sewerage services on the basis of the volume of water provided by Thames Water in performance of its statutory duties under the 1991 Act.
The litigation has been distorted by Thames Water's acceptance, for the purpose of determination of preliminary issues, that there was a basis for MoD's common law restitutionary claim (paragraph 6 of the judgment) . In her findings, the judge also recorded that "the basis on which the MoD pursue their claim, namely repayment of sums paid by mistake, is not challenged by Thames Water". Ten preliminary issues were drafted but the essential questions, as identified in the grounds of appeal, were, first, whether the court had jurisdiction to consider a restitutionary claim in the context of services provided under the 1991 Act and, secondly, if there was jurisdiction, whether Thames Water could charge for sewerage services on the basis of the volume of water entering the sites. The judge determined first, that the court had jurisdiction and, secondly, that Thames Water was not so entitled.
Having regard to the concessions made at the hearing, and the grounds of appeal, it is not open to the court to investigate whether, on the facts, a restitutionary claim is possible at all. The claim is based on the assertion that both military officers and civilians acting for MoD were unaware of the basis on which MoD was being charged. It is claimed that MoD's general understanding of the meter readings set out in invoices reflected the actual volume of water exiting the site to sewer. Due to the nature of the military, personnel are rotated to different posts every three years and it is extremely unlikely, it is said, that any one individual would gain knowledge and understanding of the basis of charging.
5. Quite apart from the public's expectation that Government Departments will check whether they are being charged correctly, it is extremely difficult to accept the claim to lack of knowledge and understanding. Thames Water's bills, under the heading "Your Water Services Bill" and "Service Charges" plainly charge for the same volume of "waste water" as for "water" provided. On the sample bill submitted to the court, that of 14 January 2002, Thames Water charged for 18747m3 of water provided and exactly the same volume of waste water. I find it difficult to understand why this litigation has come so far without investigation whether, on those facts, a restitutionary claim can hope to succeed.
Put shortly, Thames Water submits, on the jurisdictional issue, that, under the statutory scheme provided by the 1991 Act, MoD's remedy was to seek relief from the Director General of Water Services appointed under Section 1 of the Act. (Since 1 April 2006, and by virtue of provisions in the Water Act 2003 and Regulations made thereunder, the Director's functions are performed by a body corporate known as the Water Services Regulation Authority ("the Authority") . I refer in this judgment to the Director, all material events having taken place before the statutory change. Decisions of the Director, it is accepted, were challengeable by way of judicial review. For MoD, it is submitted that nothing in the 1991 Act prevents recourse to the courts for a private law claim for restitution. Nor does MoD need to rely on breaches by Thames Water of its terms of appointment under the 1991 Act, and the Act provides no defence for Thames Water. The claim was, and the judge accepted the submission, "a common law claim in mistake for restitution".
Before considering that issue in more detail, I turn to the other issue. Mr Onions QC, for MoD, accepts that, to succeed on the relevant preliminary issue, he must establish that MoD had paid for a service which was not provided. Having referred to Sections 142 and 143 of the 1991 Act, the judge stated, at paragraph 58:
"In my judgment, the service for which TW charge is the disposal of a volume of waste water … Section 142 permits TW to charge for services provided. In my judgment, that means a service actually provided – that is disposal of a volume of water. In circumstances where it can be shown that TW are charging by reference to a service which they have not, in fact, provided TW are in my judgment acting beyond their power. Section 142(1) (b) limits an undertaker's right to demand and recover charges from those to whom the undertaker has provided services. The Act does not permit an undertaker to charge a person to whom he provides no service or a lesser service than that for which it charges."
For Thames Water, Mr Nelson QC submits that, under the 1991 Act, Thames Water is entitled to calculate sewerage charges on the basis of water supplied to the site.
Section 142 of the 1991 Act provides, insofar as is material:
"(1) Subject to the following provisions of this Chapter, the powers of every relevant undertaker shall include power—
(a) to fix charges for any services provided in the course of carrying out its functions and, in the case of a sewerage undertaker, charges to be paid in connection with the carrying out of its trade effluent functions; and
(b) to demand and recover charges fixed under this section from any persons to whom the undertaker provides services or in relation to whom it carries out trade effluent functions.
(2) Subject to subsections (2A), (3) and (3A) below, the powers conferred by subsection (1) above shall be exercisable—
(a) by or in accordance with a charges scheme under section 143 below; or
(b) by or in accordance with agreements with the persons to be charged.
(3) …
(4) Except in so far as this Chapter otherwise provides, a relevant undertaker may fix charges under this section by reference to such matters, and may adopt such methods and principles for the calculation and imposition of the charges, as appear to the undertaker to be appropriate.
(5) …
(6) …
(7) …"
As originally enacted, Section 143, provided, insofar as is material:
"(1) A relevant undertaker may make a scheme ("a charges scheme") which does any one or more of the following, that is to say -
(a) fixes the charges to be paid for any services provided by the undertaker in the course of carrying out its functions;
(b) …
(c) makes provision with respect to the times and methods of payment of the charges fixed by the scheme.
(2) …
(3) …
(4) A charges scheme may—
(a) make different provision for different cases, including different provision in relation to different circumstances or localities; and
(b) contain supplemental, consequential and transitional provision for the purposes of the scheme;
and such a scheme may revoke or amend a previous charges scheme."
Section 144 (1) provides, insofar as is material:
"(1) Subject to the following provisions of this section and except in so far as provision to the contrary is made by any agreement to which the undertaker is a party—
(a) …
and
(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...
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