Northern Waters

Rochdale Boroughwide Housing Ltd v Izevbigie (2017) EWHC 790 (CH) (not on Bailii yet, Judgment is here)

Rochdale BH is a social housing provider (of what was the council’s housing stock). The issue in this case – heard as a preliminary issue – was whether Rochdale BH was a water reseller under the terms of The Water Resale Order 2006 in that charges for water it made as a part of the rent.

We’ve seen this becoming a significant issue for Thames Water in and after Jones v Southwark, where Southwark were found to be a reseller. We have also seen previous proceedings on the issue concerning Rochdale in Rochdale Borough Council v Dixon (2011) EWCA Civ 1173 (our report). The issue is that if the council/RSL is a reseller, they are only entitled to a small administrative charge and have to pass on any discounts or reductions in charges that they receive on to the tenants. For Southwark, over 13 years, this amounted to tens of millions of pounds. And of course, as we have seen, charging water rates as rent in this situation leads to uncertain arrears and failed possession claims.

The sole issue for this judgment was whether the contractual terms of the agreements between United Utilities Water Ltd (who were intervener in this case) and Rochdale BH (and its predecessor) meant that RBH was a reseller. Specifically, as per the 2006 Order, was RBH a body that “provides to any Purchaser a supply of piped water which a Water Undertaker has supplied, directly or indirectly, to the Re-seller”?

There were three relevant agreements, from 2005, 2012 and 2014.

The 2005 agreement provided

Recital B records the fact that the Intervener is responsible for “providing water” to the relevant area and may recover charges for doing so

Recital C records that the Claimant (its predecessor) has a power to enter into “an agreement for the collection and recovery” by them “on behalf of” the Intervener of “Charges fixed by the Company for the supply of water…”

Recital D records that the Intervener and the Claimant’s predecessor have agreed “that the Council will collect and recover the charges fixed by the Company for the supply of water”

“Charges” are defined as the liability to pay for water “provided by (the Intervener)”

The term “Customer” is defined as “tenants or other occupiers of the Properties who are liable to pay water or sewerage charges to the Company”.

Clause 2.1 records that the Claimant will provide certain services to the Intervener in exchange for payment

The services (at schedule 1) to be provided include the “collection and recovery of the Charges from the Customers”

Clause 2.2 records that the Intervener “authorises” the Claimant to collect the Charges on behalf of the Intervener.

The 2012 agreement was more or less the same, save that:

“Charges” are defined as charges for water services “provided to the Customers by the (Intervener) which would but for the operation of this agreement have been charged and billed by the (Intervener) directly to the Customers…

“Customers” defined as customers of the Intervener.

Clause 2.1 and Schedule 1 define the services to be performed by the Claimant as “collection and recovery of the Charges from the Customers”.

The 2014 agreement records:

At Recital B the Intervener wishes “to engage (the Claimant) for the purpose of providing collection services in respect of the (Intervener’s) water… charges due from the (Intervener’s) Customers.

“Charges” are defined as the Intervener’s charges for water “provided to the Customers by the (intervener) which would, but for the operation of this agreement have been charged and billed by the (Intervener) directly to the Customers”

“Customers” defined as customers of the (Intervener)

Clause 2.1 and Schedule 1 define the services to be performed by the Claimant as “collection and recovery of the Charges from the Customers”.

Clause 3.1 provides that the Claimant is bound to “collect and recover” the Charges.

Ms I’s argument was

  • The court was not bound by the first instance finding in Rochdale v Dixon on the 2005 agreement.
  • RBF had, in the 2012 and 2014 agreements clearly accepted responsibility for the payment of charges on all its properties, occupied or not – referring to the definition of “Charges” in those agreements
  • RBH had no authority to collect charges on the Intervener’s behalf, so was not an agent.
  • Jones v Southwark should be followed.

RBH argued that on interpretation of the agreements, it was not a reseller. Further, the 2012 and 2014 agreements had been drafted in full knowledge of Rochdale v Dixon and this should be borne in mind in interpretation.

The High Court said that it followed Arnold v Brittan on contractual interpretation, and then read the agreements as a whole, in context.

The definition of “Charges” simply meant that the Intervener did not charge and bill the tenant customer directly. It did not mean that RBH was itself being charged.

The rest of the terms of the agreement were all consonant with RBH providing collection services for the Intervener. The Intervener told RBH what the charge was and RBH collected it

The context of Dixon v Rochdale was significant as background knowledge that a reasonable person would have had in interpreting the 2012 and 2014 agreements, the effect of the Dixon v Rochdale decision being that ‘the council had got it right’ in achieving an agreement to collect charges for the Intervener without assuming responsibility for them.

Unlike Jones v Southwark, RBH were not under  contractual obligation to pay for services provided by the Intervener.

Held – RBH was not a reseller.

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London.
You can find him on Linkedin and on
Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.

Posted in assured-tenancy, Housing law - All, Possession, secure-tenancy and tagged .

4 Comments

  1. Thank you Mr Peaker. I was going to comment in a few days time, however i have just received a letter and a copy of the judgement from the head of claims and debt at United Utilities which he hopes will satisfy my concerns. In part of the letter he says. You will see from the judgement that His Honour Judge Bird refers to the three agreements between RBH (its predecessor) and ourselves at paragraph 11. These are dated 2005,2012,and 2014. That statement now only goes to add another concern to my concerns. I am now concerned and i would hope His Honour Judge Bird would also be as to why the second agreement being the legacy debt agreement between UU and RMBC commencing on the 1st April 2005 was omitted by both the claimant and the intervener and the provisions of that agreement being denied to the court. The basic workings of that agreement are of the £2m owes to UU RMBC would collect that on a 50/50 split basis,£66.000 collected in the first 3 years generating £33.000 for the council.Call this agreement 1. Agreement 1 reducing UU debt, Agreement 2 for which i have a report by RBH dated 6th December 2004 recommending the council enter into an agreement with UU and the financial implications. If approved, the scheme will operate as follows. I will post the details later. the scheme then approved on 10th Jan 2005 by council. Which results that from 1st April 2005 UU will incur no more debt on the housing stock from the occupiers(tenants). That’s two documents omitted. Agreement 1 and implications of agreement 2. I think the lady defendant has had a bit of a raw deal. Will post financial later.

    • Frank, please don’t post the financials, it doesn’t make any difference. If RBH (or RMBC) were not a reseller, they can receive a commission or payment from UU. And on that, it is the contract agreements that are important.

  2. I assure you Mr Peaker i could not do so.I am going to post four points on how the scheme would operate if approved. which it was.

    • Frank, you are not getting the point – it doesn’t make any difference to the judgment. It is purely a question of the interpretation of the contract.

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