A group of Anthony Collins Solicitors (ACS) experts from across our various client sectors have gazed into their crystal ball and given us a view on how 2021 is looking.
It leads to the prospect of defended arrears possession claims and counterclaims for alleged overpayments.
The facts of the case and its impact is reviewed below:
1. What were the core facts of this case?
The decision relates to 37,000 properties without water meters where Thames Water (TW) supply water and sewarage services. Southwark entered into an Agreement with TW in 2000 to make payments for water supply and services. These payments were made regardless of whether Southwark was able to recover any payments from tenants or not. Southwark received a discount on the water bill by way of a commission charge and void allowance. (Southwark estimated that ending their agreement with TW would cause a £2.3m loss to their Housing Revenue Account).
The Agreement did not contain any reference to tenants or to the collection of water charge payments by Southwark from the tenants nor did it place any duty of care on Southwark.
The High Court held that at least until 2013 Southwark was acting as a ‘re-seller’ of water services and not acting as an Agent for TW.
(The question of the status of a Deed of Clarification entered into between the parties in 2013 to confirm that the relationship was an Agent/Principal relationship and not one of Re-seller was adjourned as TW are not yet and needed to be a party to the proceedings to argue that issue.)
2. How did the court approach the legislative framework and the Water Resale Order?
The legislation the Court reviewed is the Water Industry Act 1991 and the Water Resale Order 2006.
The Water Re-Sale Order 2006 limits the amount that a purchaser of water can charge when re-selling the water to the final consumer (in this case Southwark’s tenants). The Order only entitles re-sellers to impose very modest administration charges. This decision found that if an amount above the maximum is charged then repayment to the tenant is required.
Section 150 of the Water Industry Act 1991 gives water consumers a right to recover any charges paid in breach of the amounts allowed by the Water Re-Sale Order.
The Court decided that a “consumer” under the Water Industry Act 1991 did not need to be the person who was in occupancy of the premises benefiting from the services.
A previous case Rochdale BC –v- Dixon in 2011 involving a similar but not identical agreement had found the opposite –that Rochdale were the Agent not a Re-seller.
3. How did the court approach the 2000 Agreement?
The Court considered the 2000 Agreement on the basis of the rules for construction of contracts and previous case law. The Court considered whether it contained the necessary requirements for an Agency relationship. The Court placed weight on the fact that the Agreement did not contain any reference to Southwark owing any duty of care to TW with regards to the collecting and charging of the water charges and as a result it was not construed as an Agency agreement. Southwark was therefore a “re-seller”.
4. Practical implications of this decision?
First landlords who have agreements with water authorities need to consider those agreements in light of this decision. If their agreements cannot be Agency agreements then landlords need to: -
- Check the amount they are charging tenants does not exceed the maximum amount chargeable under the legislation;
- Consider whether to terminate existing agreements and require tenants to pay for their water supply directly which may require variation of tenancy agreements;
- Pending an appeal by Southwark which seems inevitable, take advice on how to deal with rent arrears possession proceedings where water rates are part of the rent arrears as defences and counterclaims should be expected.
For more information
Please contact Zishaan Saleem
Luton Borough Council was prosecuted by the HSE late last year following an incident at a high school in which an assistant headteacher was attacked by a pupil and left with life-changing injuries.
This ebriefing looks at the proposal to set out 'public procurement principles' in the proposed procurement legislation.
Happy New Year - our first newsletter of 2021! Throughout this year we will continue to bring you news and developments relating to the charities sector.
Local authorities should be wary of reserving contracts for local suppliers, as recommended by Procurement Policy Note (PPN) 11/20. Other contracting authorities may want to maximise their use of this
Most housing practitioners have perhaps been waiting for this news since the latest lockdown was announced by the Prime Minister on 4 January 2021.
Climate change and biodiversity is an area where significantly faster changes are needed on a global and local basis.
Chris Lloyd Smith, Adrian Leonard and Lisa Whitehouse discuss the planning opportunities available to owners of businesses and how to prepare for unforeseen events.
In their 3rd podcast of the series, Chris Lloyd-Smith and Maria Ramon discuss a number of problems with and difficulties that can arise in mediation and the mechanisms they use to overcome them.
Our previous round-up began by sharing the news that two vaccines had shown very promising test results. Here we are, not even a month later, and the first vaccines have already been administered!
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.