Social Housing Speed Read – water bills
02nd May 2017
Water bill saga – Housing Association not liable to pay tenant any compensation in water bill claim
The water bill saga
The High Court has recently ruled on a water bill case: Rochdale Boroughwide Housing v Esther Izevbigie.
The Water Re-Sale Order 2006
The key piece of legislation here is The Water Re-Sale Order 2006; this restricts the amount that a purchaser of water can charge when re-selling the water to the final consumer – being the tenants here.
An earlier case hinged on whether a council was actually acting as an agency or a customer for the water company under The Water Re-Sale Order. The council argued that it was merely acting as an agent for the water provider in collecting the payment for the services from its tenants; meaning the order would not have applied.
However, the court looked at the terms of the arrangement between the council and the water provider and considered that the council was not acting as an agent. As a result, the council was found to be reselling water and therefore should have passed on savings to tenants.
What happened in Rochdale Boroughwide Housing v Esther Izevbigie?
Tenant Esther Izervbigie brought a water bill claim in counterclaim to a possession claim from the Rochdale Boroughwide Housing (RBH) for rent arrears.
RBH has a water contract with United Utilities Water in which it collects money from its tenants to pay United Utilities.
The judge upon analysing the contractual arrangement found that RBH was simply collecting the tenant’s bills on behalf of the water company and therefore was not a reseller – it was merely acting as an agent.
As RBH was not a reseller, it is therefore not legally required to pass on savings to tenants. Therefore, it did not owe tenants any compensation. This is in direct contrast to the judgment in the earlier case.
Judge Nigel Bird in his judgement said he acknowledged that the money involved in this instance was “modest” but understands the determination of the issue will “have an impact on very many other tenants”.
What does this mean?
This case highlights that a more in-depth look into the contractual arrangements in respect of the water bills will be required in order for a landlord to be liable to pay compensation. It is simply not enough for a tenant to argue that they are owed compensation because their landlord charges for water bills along with the rent.
This recent finding will perhaps bring relief to many social landlords who feared floods of compensation claims after the earlier case.
However, the judgment in that case cannot be ignored; if they have not already, landlords should review their agreements with water companies and consider whether amendments are needed to their agreements and to tenancy agreements.
It is believed that many tenants like Esther Izervbigie are bringing water bill claims in defence to possession proceedings. Stephen Wigley, head of legal and compliance at RBH, considers that this judgment provides “welcome clarity” for the wider housing sector.
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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