The landlord council was a water reseller so the tenant was entitled to a refund for overpaid water charges.
Summary
The High Court held that the local authority had been re-selling water to its tenants at a higher price than the permitted cap and ordered the local authority to repay the sums to the tenants.
Background
An agreement between Royal Borough of Kingston-upon-Thames (Kingston) and Thames Water made on 14 January 2003 until 3 August 2017 meant that Thames Water did not bill Kingston’s council tenants for water and sewerage charges, but billed Kingston instead. Kingston’s tenants would then pay water charges to Kingston as part of their rent under tenancy agreement.
Under the 2003 agreement, the arrangement was that charges paid by Kingston to Thames Water was reduced where properties were vacant – known as the ‘voids allowance’ including ‘commission’ and as a result, Kingston paid less to Thames Water.
Moss (M) was one of Kingston’s secure tenants. The tenant argued that the gross charges for water and sewerage were added to the rent and that Kingston had not passed on the reductions it benefitted from. In effect, the tenant argued that they had been overcharged, as in the case of Jones v London Borough of Southwark (2016) EWHC 457 (Ch).
The court's decision
After considering M’s tenancy agreement, the High Court held that Royal Borough of Kingston-upon-Thames was a reseller for the purposes of the Water Resale Orders 2001 and 2006 and in turn, was bound by the maximum charges’ provisions. This meant that M's water charges should reflect the actual sums payable by Kingston to Thames Water.
The court also held that M had a contractual claim due to the tenancy agreement having been varied to say ‘the exact amount payable for the property to the water authority’.
The court ordered that Kingston repay the sums that Kingston had retained as a result of the 2003 agreement with Thames Water because M had a right to recover overpayments of charges pursuant to section 150(5) of the Water Industry Act 1991 and paragraph 10(1) of the Water Resale Order 2006.
Comments
Following the Southwark case and now the above, many tenants in a similar position to M may be entitled to refunds of overpaid water charges where local authorities and housing associations failed to pass on discounts and reductions that they had negotiated with the water supplier for the resale of water. This could result in millions of pounds being refunded.