The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
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
The government announced on 16 May that it will provide a fund of £400m to cover the costs of removal and replacement of cladding to high rise residential blocks which have failed tests.
Whilst some people are under the impression that preparing a Lasting Power of Attorney (LPA) is simply a case of completing a form and ticking a few boxes, it is about far more than this.
A big fear for some people facing divorce and the inevitable carving up of the matrimonial assets. They seek assurances that such assets will be “ring-fenced” and retained for them.
Thinking about the legal status of being a cohabitant probably isn’t at the top of the ‘to do’ list.
When an individual is thinking about making a gift to another individual, consideration needs to be given to the Potentially Exempt Transfer (PET) trap.
We are now only a few weeks away from the biggest change to data protection laws in over 20 years. Are you compliant?
The tragedy, in this case, is that there were options readily available to the midwives that they could have used. This was not a case of having to go above and beyond.
Arising from the recent Family Division announcement, people who think they are legally divorced may in fact still be married.
The SCCS has issued providers in the scheme a series of updated and new documents in order to assist with their National Minimum Wage review.
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.