Cabinet at London borough to consider proposals for £7.88m in repayments to tenants to address water overcharging

The Mayor and Cabinet at Lewisham Council will be asked this week to approval proposals to make refunds to current and former tenants it unknowingly overcharged in respect of water rates due.

The move follows the Court of Appeal ruling last year in The Mayor & Burgesses of the Royal Borough of Kingston-Upon-Thames v Moss [2020] EWCA Civ 1381, where Kingston Council was found to be a water reseller under the terms of its agreement with Thames Water.

A report to Lewisham’s Cabinet said that Lewisham had a similar agreement with Thames Water for the supply of water to its let properties.

The report set out the background to the Moss case:

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4.2 Under the agreement, Thames Water did not bill Lewisham’s council tenants directly for water and sewerage charges but instead billed the Council. Lewisham paid the charges made by Thames Water and collected the payments from tenants. The amount of the charges was reduced to reflect an agreed "voids allowance" and it was also agreed that the Council was entitled to "a commission" which was set against the amount of the charges otherwise payable. This resulted in a reduction of the sum paid by Lewisham to Thames Water and was to cover the cost of collecting the charges and for the risk of non-recovery.

4.3. Two cases have recently come before the Courts in relation to these Agreements and the charges levied. In the initial case of Jones v Southwark [2016], the Judge held, amongst other things, that LB Southwark was a water re-seller for the purposes of the Resale Orders [the Water Resale Order 2001 and the Water Resale Order 2006] and had been charging Ms Jones more than the “maximum charge” permitted by the Resale Orders.

4.4. The subsequent case, Royal Borough of Kingston [RBK] v Moss, sought to challenge and overturn the Jones v Southwark decision. Lewisham, along with 23 other local authorities, formed a collective through the Local Government Association [LGA] in support of the challenge. RBK sought to argue that in collecting water and sewerage charges from the tenant, the Council was not acting as a ‘water reseller’.

4.5 The case went to the High Court in October 2019 and on appeal to the Court of Appeal in October 2020. The Court of Appeal found that RBK was a water reseller and Mr Moss was entitled to a refund of overpaid water charges.

The Cabinet report said the council was committed to refunding those tenants and former tenants who had mistakenly been overcharged for their water.

“It should be noted that the positions taken by other London Boroughs is variable. Some boroughs have committed to making refunds in the same manner as Lewisham is proposing. Others are still developing their proposals or are proposing only to cover the previous six years of refunds, applying the statute of limitations,” it added.

The liability to the council is for the commission element only, not the full water charges for the relevant period.

The report proposes that the amounts payable to residents will be calculated from 1 April 2001, when the 2001 Water Resale Order came into force, until 31 March 2017, when the agreements ended.

Modelling carried out by council officers shows that the amount currently known to be payable is £7,881,837.

The Cabinet at Lewisham will consider the proposals at a meeting on 9 June.

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