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Liability for water charges: implications for local authorities 28/04/2016

The High Court recently made a decision (Jones v Southwark BC) regarding the collection of water charges in the agreement between Southwark council and Thames Water.


By way of background, Southwark Council entered into an agreement under which Thames Water supplied water and sewerage services to all of the council's un-metered rented properties. Under the agreement Thames Water did not collect charges from each individual tenant, rather the Council took on the cost of collection, and the risk of bad debts and voids. Because of this arrangement, Thames Water offered a discount to the council. Any surplus that was collected by the council was retained and went into the Housing Revenue Account.


The High Court decided this arrangement was inconsistent with a relationship of principal/agent, and that collecting charges for water and sewerage services from tenants on behalf of the utility company by the Council, was re-selling. It was ruled that the Council had overcharged tenants contrary to the restrictions under the Water Re-Sale Order 2006.


As a result of the ruling, local authorities with similar arrangements to that of Southwark Council may find themselves facing claims for overpaid water charges going back many years. While the sum of individual claims may be relatively small, the potential liability for authorities with a large number of properties could be very significant. I would encourage those with similar agreements with Water Companies to review their agreements to ensure they are compliant with the 2006 Order.


Councils who believe they may be affected by this ruling and have any questions or would simply like some further information about working collectively to regularise any such agreements, please contact the Local Government Association, Head of Legal, Thelma Stober,

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