The Mayor & Burgesses of the Royal Borough of Kingston-upon-Thames v Mr Derek Moss
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Arnold,Sir Terence Etherton MR |
| Judgment Date | 27 October 2020 |
| Neutral Citation | [2020] EWCA Civ 1381 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2020/0030 |
[2020] EWCA Civ 1381
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
Mr Justice Morgan
PT-2018-000194
Royal Courts of Justice
Strand, London, WC2A 2LL
THE MASTER OF THE ROLLS
Lord Justice Lewison
and
Lord Justice Arnold
Case No: A3/2020/0030
Mr Ranjit Bhose QC & Ms Ruchi Parekh (instructed by Sharpe Pritchard LLP) for the Appellant
Mr Martin Westgate QC & Mr Tom Cleaver (instructed by Deighton Pierce Glynn) for the Respondent
Hearing dates: 20 th October 2020
Approved Judgment
The issue
Mr Derek Moss is the tenant of a one-bedroomed flat. His landlord is The Royal Borough of Kingston-upon-Thames (“Kingston”). His weekly rent includes a charge for water. Like many local authority landlords, Kingston has a written agreement with the water undertaker (in this case Thames Water Utilities Ltd or “TWU”) for the supply of water to its thousands of let properties. The relevant agreement was made on 14 January 2003 (“the 2003 agreement”). If Kingston was a re-seller for the purposes of the Water Resale Orders 2001 and 2006 then the amount that Kingston can pass on to its tenants is capped. The main issue on this appeal is whether Kingston, under the terms of the 2003 agreement, was a water re-seller before it was varied in 2017. Morgan J held that it was. His judgment is at [2019] EWHC 3261 (Ch). Like the judge, I have set out the text of the agreement in an Appendix to this judgment. It is common ground that if Kingston was a water re-seller, the charge that it has made to Mr Moss exceeds the cap.
The legislative background
The supply of water and sewerage services is governed by the Water Industry Act 1991. Under section 6 of that Act the Secretary of State has the power to appoint a company to be a water undertaker for an area within England and Wales. As mentioned, TWU is the undertaker for Kingston's area. A water undertaker has a statutory duty to supply water to domestic premises (“the domestic supply duty”); and to maintain the connection between the undertaker's water main and the service pipe by which that supply is provided to those premises: section 52 (1). Two categories of persons can demand a domestic supply of water: an occupier of the premises or a person who is the owner of the premises at that time and agrees with the undertaker to pay all the undertaker's charges in respect of the supply demanded: section 52 (5).
The domestic supply duty is enforceable by “the consumer”: section 54 (1).
A water undertaker has power to disconnect a service pipe, or to cut off a water supply, if it is reasonable for the disconnection to be made, or the supply cut off, for the purpose of carrying out any necessary work: section 60 (1). Except in an emergency, before exercising that power the water undertaker must give notice to “the consumer”: section 60 (3). It also owes a duty to “the consumer” to carry out the works with reasonable dispatch; and not to interrupt a supply of water for more than 24 hours without making an emergency supply available: section 60 (4).
The “consumer” is a person who is liable to pay charges to the water undertaker in respect of the supply: section 93 (1).
Section 142 (1) gives a water or sewerage undertaker the power to fix charges for services provided in the carrying out of its functions and to demand and recover those charges from any person to whom the undertaker provides services. In the case of a dwelling the charges must be fixed by a charging scheme made under section 143. The charging scheme must be approved by the regulator: section 143 (6). Section 144 (1) provides:
“(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) supplies of water provided by a water undertaker shall be treated for the purposes of this Chapter as services provided to the occupiers for the time being of any premises supplied; 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 connecting.”
Under section 144, therefore, liability to pay water charges is that of the occupier “except in so far as provision to the contrary is made by any agreement to which the undertaker is a party”. One question that arises is whether the agreement between Kingston and TWU is an agreement which provides to the contrary.
Section 150 gives the regulator power to fix maximum charges for services provided with the help of undertakers' services. It provides:
“(1) The [regulator] may from time to time by order fix maximum charges which a person who is not a relevant undertaker may recover from another such person in respect of water supplies or sewerage services provided to that other person with the help of services provided by a relevant undertaker.
…
(2) For the purposes of this section water supplies or sewerage services are provided to a person with the help of services provided by a relevant undertaker if—
(a) a facility for that person to have access to a supply of water provided by a water undertaker in pipes, or to make use of sewerage services provided by a sewerage undertaker, is made available to that person otherwise than by the undertaker;
(b) that person is provided with a supply of water in pipes by a person to whom the water is supplied, directly or indirectly, by a water undertaker; or
(c) that person is provided with sewerage services by a person who, for the purpose of providing those services, makes use of sewerage services provided, directly or indirectly, by a sewerage undertaker.
…
(5) Where a person pays a charge in respect of anything to which an order under this section relates and the amount paid exceeds the maximum charge fixed by the order, […]
(a) the amount of the excess; and
(b) if the order so provides, interest on that amount at a rate specified or described in the order,
shall be recoverable by that person from the person to whom he paid the charge.”
In 1999, the regulator published a consultation paper on the use of its power to make a Water Resale Order. The consultation paper said (among other things):
“… water resale occurs when water … provided to a customer by a licensed undertaker (a supplier) is sold by that customer to a third party. Such arrangements are most commonly found on mobile home parks, in flats and apartments and other rented or leasehold accommodation… In the absence of a maximum resale order, the price which can be charged is governed only by any contractual arrangements existing between the parties. Cases raised with Ofwat suggest that misunderstandings or disputes often arise because such contractual arrangements are either insufficiently clear or allow the reseller too much freedom.”
Following the consultation exercise the regulator made the Water Resale Order 2001 and, subsequently, the Water Resale Order 2006. The agreement with which we are concerned straddles the period covered by both orders; but the definitions in each order are the same. It is necessary to refer only to the 2001 Order. It contains a series of definitions which include:
“Purchaser” means a person who occupies any dwelling and who buys from a Re-seller any water or sewerage services.
“Relevant Undertaker” means a Water Undertaker or a Sewerage Undertaker.
“Relevant Pipe” means a water main (including a trunk main), resource main, discharge pipe or service pipe.
“Re-seller” means any person who is not a Relevant Undertaker but who
(a) provides to any Purchaser a supply of piped water which a Water Undertaker has supplied, directly or indirectly, to the Reseller; or
(b) provides to any Purchaser a sewerage service which a Sewerage Undertaker has supplied, directly or indirectly, to the Re-seller, but does not include any person who uses any Relevant Pipe belonging to any Water Undertaker to transport water already belonging to that first person from a point of connection on any Water Undertaker's supply system.”
If a person is a re-seller, the charges he may pass on are capped by a formula which differs from the formula to be found in a charges scheme. The formula also differs as between the two Orders, but the differences need not concern us.
Section 1 of the Local Authorities (Goods and Services) Act 1970 gives local authorities power to enter into agreements with public bodies to provide the public body with administrative, professional or technical services. Paragraph 20 of Schedule 1 to the Water Consolidation (Consequential Provisions) Act 1991 provides:
“… the powers of a local authority under that Act shall be deemed to include power to enter into an agreement for the collection and recovery by the authority, on behalf of any water undertaker or sewerage undertaker, of any charges fixed by the undertaker under Chapter I of Part V of the Water Industry Act 1991.”
This power replaced a similar power previously contained in section 32A of the Water Act 1973. It is this power...
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