LAW REPORT: 16 April 1997: Possession order for water charges default

Lambeth London Borough Council v Thomas; Court of Appeal (Lord Justice Kennedy, Mr Justice Mance) 25 March 1997

A council was entitled to adopt a policy whereby, for the benefit of all its tenants, it collected water charges from them on behalf of a water company and accounted to the water company on a discounted basis, and the resulting obligation on a tenant to pay water charges to the council was an obligation of the tenancy, breach of which might lead to possession proceedings.

The Court of Appeal dismissed the council's appeal against the decision of Judge James at Lambeth County Court not to make a possession order against the respondent.

The respondent was a tenant of the council. The council had sought a possession order on ground 1 of Schedule 2 to the Housing Act 1985, which applied where "any rent lawfully due from the tenant has not been paid or any obligation of the tenancy has been broken or not performed". The reason given was that rent and other charges, the bulk of which were water charges, were outstanding. The judge held that the water charges constituted rent for the purposes of the 1985 Act and gave judgment in the sum claimed, but refused to make a possession order on the ground that it would not be reasonable, save in exceptional circumstances, to do so for the purpose of enforcing a local authority's agreement to collect water charges.

Christopher Baker (Council Solicitor) for the council; the respondent in person.

Mr Justice Mance said that the council had power to enter into an agreement for the collection and recovery, on behalf of a water company, of any water charges payable or fixed for the supply of water by the water company.

The council had entered into such an agreement, by which it claimed and sought to collect from its tenants the amounts fixed by the water company in respect of their particular properties. It accounted to the water company on a lump sum and discounted basis, designed to mean that the council achieved a surplus for the benefit of its housing revenue, which enured to the benefit of all its tenants by enabling the council to keep rents down.

The effect of the agreement between the council as landlord and the respondent as tenant was to entitle the council to claim from the respondent the charges it had arranged with the water company to collect. The water charges which were thus contractually outstanding from the respondent to the council were either "rent" or an "obligation of the tenancy" so that ground 1 of Schedule 2 to the 1985 Act applied, and it was unnecessary in the present case to choose between the two separate concepts.

Whilst there was force in the submission made on behalf of the council that rent in the present context bore an expanded meaning, it was preferable to leave any final determination of the question whether water charges were rent until a case arose in which such a decision was essential.

The test adopted in Gower v The Postmaster-General (1887) 57 LT 527 in deciding whether a particular obligation ran with the land was whether it was "merely collateral to the land" or "touches or concerns the thing that was demised". In the present case, since the water charges were due from the tenant as occupier of the demised premises and user of water there, the obligation on the tenant to pay water charges to the council resulting from its agreement with the water company must be regarded as touching and concerning the demised premises, and thus as an "obligation of the tenancy", even if not as rent.

In those circumstances the judge was clearly right to conclude that he had jurisdiction to make a possession order under section 84(2) of the 1985 Act. The only question, in view of the language of section 84(2)(a), was whether in refusing to conclude that it was reasonable to make such an order the judge had erred.

The judge's approach had been wrong in principle and influenced by irrelevant considerations. The only reasonable order would have been a suspended possession order. Satisfactory arrangements for the payment of arrears having since been made, there was, however, no purpose in making such an order.