Thames Water Utilities Ltd v Hampstead Homes (London) Ltd

Under section 146(2) of the Water Industry Act 1991, a water or sewerage undertaker may charge for connecting premises which have not previously been connected for domestic purposes. The provision concerns the connection of new premises to the public system, rather than the cost of making a physical connection.

Premises is an ordinary contextual expression. It may include part of a larger building. Where an existing building is converted, the question is one of fact and degree: whether the conversion creates new premises or retains the identity of premises already connected. Once premises are new in that sense, no separate proof of increased volumetric demand is required.

The claimant undertaker sought infrastructure charges after the defendant developers converted two previously connected office buildings into 109 flats and obtained new water-service connections. The county court dismissed the claim. It treated the two original buildings as the relevant premises and held that they had already been connected to water and sewerage services.

The claimant appealed. The central issue was whether each newly created flat could be premises which had never previously been connected within section 146(2) of the Water Industry Act 1991, despite the former buildings having had water and sewer connections.

1. Appeal allowed unanimously. Lord Justice May held that the 109 flats were new premises which had never previously been connected. The county court order was set aside and judgment entered for the claimant. Mr Justice Bodey agreed.

2. Section 146(2) of the Water Industry Act 1991 must be construed by reading premises together with connection. The word premises has no fixed meaning throughout the Act. In the context of water supply and sewerage, it can include a building or a part of a larger building to which water is supplied and from which sewage is drained.

3. The charge authorised by section 146(2) is not simply a charge for carrying out physical connection works. The costs of physical water and sewer connections are recoverable under other provisions. Section 146(2) concerns the connection of premises not previously connected to the public systems and is capable of recouping a contribution towards the capital and maintenance costs generated by new development.

4. On a conversion of existing buildings, the inquiry is one of fact and degree. The court must decide whether the work has created and connected new premises, or whether it has retained the identity of previously connected premises. A modest alteration to an existing house will ordinarily not suffice. Here the creation of 109 flats did.

5. It was unnecessary to prove a specific additional volumetric burden once the premises were new in this sense. May LJ also stated, without deciding the point as necessary to the result, that condition C of the undertaker’s appointment was not properly available as an aid to construing section 146(2).

1. Court of Appeal (Civil Division) — allowed the appeal and set aside the county court’s dismissal of the claim: [2002] EWCA Civ 1487.
2. Reading County Court — His Honour Judge Catlin dismissed the undertaker’s claim under section 146(2) on 17 October 2001, with written reasons handed down on 23 November 2001.