Ministry of Defence v Thames Water Utilities Ltd

A statutory water undertaker may use an assumed volume to calculate sewerage charges, but its statutory power extends only to services actually provided. A charges scheme cannot authorise recovery for a service, or volume of service, which the undertaker did not provide. Approval of the scheme by the regulator does not cure that defect.

A statutory enforcement regime does not exclude a common law restitutionary claim unless the legislation clearly removes the court’s jurisdiction. A customer may therefore pursue repayment of sums paid by mistake where the claim is for restitution rather than enforcement of the undertaker’s statutory duties. A discretionary billing policy does not prevent that claim.

The Ministry of Defence claimed repayment of more than £1 million in sewerage charges paid to Thames Water Utilities Ltd for military barracks. Investigations indicated that water lost through leakage from the Ministry’s pipework had been included in the volume used to calculate wastewater charges.

The parties agreed preliminary issues concerning jurisdiction, the proper construction of the Water Industry Act 1991 and Thames Water’s annual charges schemes. Thames Water argued that the statutory enforcement machinery provided the Ministry’s exclusive remedy and that the schemes permitted charging by reference to assumed volume. The central questions were whether the court had jurisdiction to entertain the restitutionary claim and whether the statutory scheme authorised charges for wastewater services not actually provided.

1. Jurisdiction. The court had jurisdiction to determine the Ministry’s common law restitutionary claim. Section 18(8) of the Water Industry Act 1991 did not clearly exclude the ordinary jurisdiction of the courts. The case differed from Marcic v Thames Water Utilities Ltd [2004] 2 AC 42, where the claimant was effectively seeking to enforce the undertaker’s general statutory duty to provide sewerage services. The Ministry sought repayment for money paid by mistake, not relief enforcing a statutory duty or requiring a compliant charges scheme. The principle in Pyx Granite Co Ltd v Ministry of Housing and Local Government and Others [1959] 3 All ER 1 supported the conclusion that clear words were required before the right to seek redress in the courts could be removed.
2. Statutory charging power. Sections 142 and 143 permitted Thames Water to adopt an assumed-volume method for calculating charges. That method was not, however, unlimited. The power was confined to charges for services provided in the course of carrying out the undertaker’s functions. On the facts and on the wording of Thames Water’s schemes, the service charged for was the disposal of a volume of wastewater. Thames Water therefore acted beyond its power where it charged for a volume which it could be shown had not been discharged into the public sewer.
3. The existence and regulatory approval of a charges scheme did not provide a defence to the restitutionary claim. A scheme purporting to authorise charges for services not provided was outside sections 142 and 143. Thames Water’s discretionary billing policy had no statutory force and did not prevent the Ministry from seeking repayment.
4. The preliminary issues were answered accordingly: issue 1, no; issue 2, not pursued; issue 3, yes; issue 4, no; issue 5, yes, subject to the continuing mistake claim; issue 6, no before 2002/3 and yes after that date; issue 7, no; issues 8 and 9, not applicable; and issue 10, yes.