A Warning to Water "Re-sellers"

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17 November, 2020

Emily Jordan
Senior Associate

The Royal Borough of Kingston-upon-Thames has lost its appeal to the Court of Appeal over a High Court ruling that it overcharged tenants for water.

It is not uncommon for local authority and private registered providers of social housing landlords to enter into agreements with water companies to collect water and sewage charges from their tenants. The tenancy agreements may state that the tenant is to pay water charges to the landlord as part of their rent.

The Water Resale Orders 2001 and 2006 cap the amount that landlords can pass onto its tenants as a water re-seller. In effect, landlords are made to pass on the benefit of any commission payments and deductions for voids that it may receive from the water company.

In 2019, the High Court concluded that when collecting water charges from its secure tenants alongside the weekly rent, RB of Kingston-upon-Thames was acting as a water 're-seller' for the purposes of the Water Resale Orders and had, as a consequence, been charging its tenant Mr Moss more that the statutory maximum set by those Orders.

The Council appealed to the Court of Appeal, arguing that it was acting as agent for Thames Water Utilities Ltd or, alternatively, acting on its behalf in collecting the charges.

The crux of the case was interpretation of the 2003 agreement between the Council and Thames Water. The Court of Appeal rejected the Council's arguments and found that the agreement clearly pointed to an agreement of sale and purchase of water and sewerage services, such that the Council was then a re-seller of those services to its tenants.

The Court of Appeal agreed that the Council had charged its tenants in excess of the cap and Mr Moss was entitled to repayments. This was not withstanding the fact that Mr Moss had been charged the exact same that he would have been had Thames Water charged him direct.

This decision will cause concern to social landlords who have similarly worded agreements with water companies to that in Moss. It will now be difficult to persuade a court that a relationship of principal and agent exists only, as opposed to a re-seller. This may be particularly difficult for landlords to accept when they have been charging tenants the same amounts that the water company would have if charging directly. The Court of Appeal decision may also encourage other tenants to claim for repayment of excess charges from their landlords. Additionally, tenants in such a situation could have a defence to a possession claim brought on rent arrears grounds.

RB Kingston-Upon-Thames v Moss [2020] EWCA Civ 1381

For more information contact Emily Jordan in our Housing & Regeneration department via email or phone on 0333 207 1130. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

Learn more about our Housing & Regeneration department here

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