Rochdale Borough Council v Dixon

A local authority may lawfully agree to collect a water undertaker’s charges through secure-tenancy obligations where the undertaker remains the supplier, fixes the charges and authorises collection on its behalf. The council’s bulk payment arrangement and exposure to non-payment do not alter that conclusion.

Under section 103 of the Housing Act 1985, a preliminary notice must state the proposed variation and its effect sufficiently to enable meaningful consultation. Its adequacy is context-specific. It need not catalogue every consequence of breach, and substantial compliance may suffice.

A term requiring payment of water charges was not unfair where it was statutorily authorised, openly consulted upon, and any possession order remained subject to the court’s statutory assessment of reasonableness.

Rochdale Borough Council obtained a suspended possession order against its secure tenant, Mr Dixon, for water-charge arrears. Since 2005, under an agreement with United Utilities, Rochdale had collected water and sewerage charges with tenants’ weekly payments after varying the tenancy terms.

Mr Dixon stopped paying the water element in 2007 as a matter of principle. He contended that the collection agreement was ultra vires, that the variation notice failed to comply with section 103 of the Housing Act 1985, that the new term was unfair under the Unfair Terms in Consumer Contracts Regulations 1999, and that possession was unreasonable.

The appeal therefore concerned the validity and consequences of incorporating water charges into a secure tenant’s contractual obligations.

1. Appeal dismissed unanimously. Lord Justice Rix, with whom Lord Justice Rimer and Lord Justice Elias agreed, upheld the suspended possession order.
2. Paragraph 20 of Schedule 1 to the Water Consolidation (Consequential Provisions) Act 1991 authorised the agreement. United Utilities continued to supply the services, fix the charges and remain responsible for service complaints. Rochdale’s collection of those charges through the tenancy agreement was therefore collection and recovery on United Utilities’ behalf. Rochdale’s quarterly bulk payments, commission and assumption of the non-payment risk did not turn the charges into its own charges.
3. For section 103(2)(b) of the Housing Act 1985, the effect of a proposed variation means more than a repetition of its words. What is sufficient depends on the circumstances. A landlord need not set out every possible consequence of breach. Here the notice made clear that water charges would be paid with rent as a weekly tenancy obligation. It enabled tenants to understand and challenge the potential consequence of non-payment. There was, in any event, substantial compliance with the statutory requirement.
4. The varied term was not unfair under regulations 5 and 6 of the Unfair Terms in Consumer Contracts Regulations 1999. It was authorised by statute, followed consultation and a democratic decision, required payment for water services received, and created no significant imbalance contrary to good faith. The possibility of possession was materially qualified by the requirement that a court find possession reasonable.
5. The trial judge had considered Mr Dixon’s genuine belief and long residence, but was entitled to conclude that a suspended order was reasonable. The arrears arose from a deliberate continuing refusal to pay charges he could pay. The order gave him almost six years to clear them.

• Court of Appeal (Civil Division): Dismissed Mr Dixon’s appeal and upheld the suspended possession order: [2011] EWCA Civ 1173.
• Oldham County Court: HHJ Platts made a possession order for breach of the tenancy obligation to pay water charges, suspended on payment of current charges and £5 weekly towards arrears.