Second council faces major compensation payout over water overcharging

The Royal Borough of Greenwich could be forced to pay a high level of compensation to tenants overcharged for water services, it has been claimed.

Garden Court Chambers made the claim after one of its barristers represented the defendant in Royal Borough of Greenwich v KW claim number 2PA32115.

The case involved an application to suspend a warrant for possession concerning rent arrears at Woolwich County Court on 2 March 2017.

According to Garden Court, an issue arose in respect of the extent of the defendant’s liability to pay rent as the rent contained a service charge for the provision of a supply of water and sewerage charges. The defendant has been a social tenant of Greenwich since 2008.

The chambers said that as part of the application to suspend the warrant the defendant sought disclosure of the details of the agreement for water and sewerage charges with Thames Water.

The Royal Borough is reported to have accepted that under its tenancy agreement the decision in Jones v Southwark Council [2016] EWHC 457 (Ch) applied in respect of the agreement for water charges they had with Thames Water from 2006.

In June 2016 Southwark decided to replay 48,000 current and former tenants £28.6m following a High Court ruling earlier in the year that it had overcharged for water and sewerage for 12 years.

Mr Justice Newey had concluded that unless and until a 2013 Deed (stating that the council was not a water reseller under the relevant regulations) took effect, the relationship between Thames Water and Southwark was not one of principal and agent but involved Southwark buying water and sewerage services from Thames Water and re-selling them to its tenants.

The judge went on to find that as a result, the Water Resale Order 2006 applied and served to limit what tenants could be charged; and the amounts that Southwark charged the claimant (and other tenants with unmetered water supplies) exceeded the "maximum charge" allowed under the 2006 Order.

In the KW case, on the suspension of the council’s warrant for possession, Deputy District Judge White held – in open court – that although the term of the tenancy agreement for levying water service charges on unmetered tenants purported to be an agency term, that in fact the Royal Borough of Greenwich were re-sellers of water and that the defendant had been overcharged unlawfully.

On the evidence presented by Greenwich and on the documentation presented, the defendant/KW was entitled, subject to a small administration fee, to a set-off of 20% with interest on all of the water charges from the outset of the tenancy.

Garden Court said: “Furthermore, unlike in Jones v Southwark Council, where Southwark had purported to change their agreement with Thames Water, under the terms of the agreement between Thames Water and the Royal Borough of Greenwich the defendant was entitled to the discount on future charges levied.

“DDJ White identified in his judgment that the overcharging and future overcharging for water services by Greenwich did not merely apply to this case but applied to all unmetered tenants of Greenwich who were paying for water services.”

The set said that, at present, the number of Greenwich tenants who had been affected (or continue to be affected) and over what period was unknown since the water services agreement remained in place.

“However, given the numbers affected in Southwark it is likely to be considerable and a high level of compensation paid out,” it argued.

Tim Baldwin was instructed by Nik Antonides of Powell & Co.