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, Thelma.firstname.lastname@example.org.