Canal & River Trust v Thames Water Utilities Ltd

Statutory payments for the transfer of rights to flowing water may represent consideration for both the transfer and continuing maintenance obligations. Their character is determined by construing the legislation as a whole and in its legislative context, rather than by reference to the volume or market value of water abstracted.

A later licensing regime does not necessarily replace preserved statutory payment obligations. Licence charges calculated to balance water-resources accounts are not charges for the value of the water itself. A licence holder’s statutory defence to claims concerning abstraction is not displaced by restitutionary or unjust-enrichment analysis. Loss under the statutory civil-remedies regime must be consequential on abstraction, not the abstraction itself.

This Part 8 claim arose from a long-standing dispute concerning payments due for abstraction of water from the River Lee. The claimant, successor to the bodies responsible for the navigation and maintenance of the River Lee, sought clarification of the statutory basis on which the defendant, a successor to the Metropolitan Water Companies, was required to make payments.

The principal questions concerned the effect of the River Lee Water Act 1855, the subsequent licensing regime under the Water Resources Act 1963 and the Lee Conservancy Catchment Board (New Functions of River Authorities) Order 1965, and whether additional payment could be claimed by contract, restitution, unjust enrichment or under section 48A of the Water Resources Act 1991.

1. The court concluded that the annual payments under section 5 of the River Lee Water Act 1855 were consideration for the whole statutory bargain. That bargain comprised the permanent transfer to the Two Companies of rights to the flowing water of the River Lee, subject to navigation requirements, together with the Trustees’ continuing maintenance and repair obligations. The payments were not payment for a precise quantity or market value of water, nor solely payment for maintenance. (paras [33]-[41], [66])

2. The licensing regime introduced by the Water Resources Act 1963 and the 1965 Order did not alter the nature of the section 5 payments. Section 5 was preserved. The licences of right were intended to dovetail with the pre-existing statutory entitlement and covered the water previously vested in the Metropolitan Water Board, subject to navigation requirements. Licence fees and charges operated under a separate statutory scheme and were not charges for the value of the water. (paras [56]-[64])

3. The repeal of section 9 of the 1855 Act did not revive section 68 of the Lee Navigation Improvement Act 1850 or re-vest a statutory right to sell flowing water in the British Waterways Board or the Catchment Board. The 1855 Act had superseded that power; alternatively, the later licensing regime and, further alternatively, the common law position produced the same result. (paras [60]-[64])

4. No contract for payment for water covered by the licences of right could be implied. The statutory scheme left no necessity or evidential basis for implying contractual relations between the parties. Cargill v Gotts did not assist the claimant. (paras [88]-[89])

5. Any restitutionary claim based on wrongful interference with water would lie in tort rather than contract and would therefore be barred by section 48(2) of the Water Resources Act 1991. The necessary elements of unjust enrichment were also absent: the defendant’s abstraction was authorised, the claimant had transferred its rights to the water, and the abstraction was not at the claimant’s expense. In any event, the statutory defence applied. (paras [90]-[91])

6. Section 48A of the 1991 Act concerns loss or damage caused by abstraction. The breach is not abstraction itself, but consequential loss or damage caused by it. A claim for payment for water concerns the abstraction itself and therefore falls outside section 48A. The reasoning in Chetwynd v Tunmore was adopted. (para [92])

7. None of the alternative grounds for payment succeeded. The precise declarations were left for further submissions. (para [93])