CCRTF 1999/1224/B2 
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH WYCOMBE COUNTY COURT
(HIS HONOUR JUDGE CHRISTOPHER TYRER)
Royal Courts of Justice
Strand, London WC2A 2LL

Friday, 8 December 2000
B e f o r e:

LORD JUSTICE THORPE
and
LORD JUSTICE POTTER
____________

THAMES WATER UTILITIES LIMITED
Claimant/Appellant
v

GERALD B RICHARDSON
JOHN WEAVER
FLETCHER SIDNEY GEORGE CODLING
Defendants/Respondents
____________
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
____________
MICHAEL DAICHES (instructed by Messrs S H Byrne, Solicitor for Thames Water Utilities Limited) appeared on behalf of the Appellant.

DAVID STREATFIELD-JAMES (instructed by Messrs Kidd Rapinet of High Wycombe HP11 2AD) appeared on behalf of the Respondents.
____________
Judgment
As Approved by the Court

Crown Copyright ©

POTTER LJ:

Introduction
1.	This is an appeal by the claimant, Thames Water Utilities Ltd., (“Thames”) from the judgment and order of His Honour Judge Christopher Tyrer dated 10th May 1999 in the High Wycombe County Court by which he dismissed the claim of Thames against the three defendants in respect of charges for water supplied to their premises at Spring Coppice, High Wycombe, Buckinghamshire, (formerly known as Newmer Common).  Thames have been the relevant statutory water undertaker in respect of water supplies in the area of High Wycombe since 1st September 1989, as successor to the Thames Water Authority (“TWA”), which was the undertaker between 1st April 1974 and 31st August 1989, in succession to the Buckinghamshire Water Board (“BWB”).  It is common ground that Thames succeeded to all the rights and liabilities of its predecessors and that for legal purposes no distinction need be made between them as successive water undertakers for the area.

2.	There are a group of five houses in separate ownership at Spring Coppice (which for ease of reference I shall refer to as “the site”).  The first defendant (“Mr Richardson”) occupies Walnut Tree House, the second defendant (“Dr Weaver”) is the occupier of Beechwood House and the third defendant (“Mr Codling”) was the occupier of Yolsum House until his death in 1997.  His personal representatives have been substituted as defendants in his place.  Each of the defendants has for some years refused to pay the water rates demanded of them as occupiers of their houses on the ground that the liability rests upon the West Wycombe Estate (“the Estate”) under the terms of an agreement made between the Estate and BWB in or about 1968.  There are two other houses at the site, namely Yew Tree House and Manitou.  The water supply to the five houses on the site is made through a common supply pipe (“the Spring Coppice Supply Pipe”).  However, it is only the defendants who dispute their liability to pay Thames’ charges and the occupiers of Yew Tree House and Manitou are not involved in this litigation.

3.	The relevant layout of the water supply in the area is as follows.  About 1300 metres to the west of the site, the trunk main for the area runs roughly North-South across open land in a 15 inch diameter pipe.  There is a junction in the trunk where connections have been made to three 1 inch diameter service pipes, laid in a common trench, which make their way in a south-easterly direction over land belonging to the Estate.  After about 300 metres the first pipe makes a right turn south to supply Fryers Farm.  Five hundred yards on, the second pipe makes a similar right-turn south to supply Grove Farm.  The third pipe, which is the Spring Coppice Supply Pipe continues onward until it reaches the site, at which point it connects to service pipes which carry the mains water supply to the five houses built upon the site.

4.	Those houses were built in 1972, when the statutory water undertaker was BWB.  Neither BWB, nor its successor TWA, demanded water charges from the occupiers of the five houses prior to 1979, for reasons which appear below.  Thereafter the defendants refused to pay the charges which were demanded from them six monthly.  In 1982, Thames issued proceedings against the defendants which were struck out for want of prosecution.  In November 1995 Thames brought separate proceedings against each of the three defendants, claiming charges for water and sewage services provided since 1989.  Those separate proceedings were consolidated pursuant to a Consent Order dated 18th January 1996.  At trial, Thames accepted that no sewerage services had in fact been provided to the defendants and the only issue was the recoverability of water charges totalling £1,833.87 from the first defendant and £1,324.51 from each of the second and third defendants.

The History
5.	Prior to 1961, before the site was developed, Fryers Farm and Grove Farm enjoyed a private water supply.  The Estate then proposed to develop the area of land which became the site.  It proposed to BWB that the Estate would replace the existing supply to the two farms and would also lay a new private pipe at its own expense to supply the proposed development.  It informed BWB that the houses to be built would be sold on long leases, BWB retaining overall control of the development.  BWB stated that they had no objection to such proposal.  In April 1963, the proposal changed, in that the Estate no longer intended to develop the site itself, but to offer it for sale.  However, it did not so inform BWB.  In January 1967, BWB recommended, and in November 1968 the Estate formally proposed, the laying of three separate supply pipes to be laid in one trench as described in paragraph 3 above in order to supply Grove Farm, Fryer’s Farm, and the five houses proposed to be built at the site.  Each pipe was to be supplied with water from the main on a metered basis, three metres being installed on the Estate side of the mains connection.  The work of laying the pipes was done by the Estate’s contractors at the Estate’s expense, BWB installing the connection by way of a short junction pipe off the trunk main, as well as the meters which would record the amount of water passing from the junction pipe into the three supply pipes laid by the estate.

6.	After the works had been carried out to BWB’s approval, but before any of the houses were constructed on the site, the Estate sold out to a private developer.  As the houses were being completed, BWB wrote to the Estate confirming that the quantity of water registered on the meter recording the water passing into the Spring Coppice Supply Pipe from the trunk main would be chargeable to the Estate on a metered (i.e. measured) basis.  To its surprise, BWB, then received a letter from the Estate dated 21st December 1971, which stated:
“We do not consider that the Estate are responsible for the payment of a meter.  We have merely given permission to the Developer to use the Estate pipe.  Would not your Board consider charging for the new dwellings on their rateable value, as they do on other dwellings?” 

7.	On 29th December 1971, BWB replied, recording the previous circumstances in which BWB had made the necessary connections to their main and fitted the three meters and saying:
“…at this time the Board was under the impression that the Estate would be carrying out the new development at Spring Coppice and I am sure that if it had been known that private development would be taking place, the Board would have required a main extension to the site.

With regard to your query concerning the charging of the five dwellings on the rateable value basis, due to the length of the supply pipe and the possible leakage therefrom, I do not consider the Board should take over this responsibility and as previously mentioned, the Board will require that one consumer be responsible for the payment of the charges for the water consumption registered on the meter.”

8.	On 23rd March 1972, BWB wrote:
“..The Board would not be prepared to take over the metered private supply pipe to the development, but if you are no longer able to agree to the original arrangement, it will be necessary for the Board to approach the developers with a view to negotiating for an orderly extension of the distribution main along the public highway.  These properties are of good class and in my view the prospective owners are entitled to expect water supply free of complications of ownership and future maintenance and I believe it is of paramount importance that their best interests should be considered.”

9.	The Estate replied, suggesting that developers should be approached with a view to financing the suggested mains extension.  In fact the developers had already approached BWB to take over the Spring Coppice Supply Pipe as a main supply pipe, but BWB were reluctant to do so.  Accordingly, BWB arranged for estimates to be prepared for the construction of a mains extension to carry water to the site along a road some distance to the South of the Spring Coppice Supply Pipe.  Meanwhile, it  maintained its position that the Estate was liable to pay for the water passing through the pipe as metered.

10.	On 21st April1972, the Estate wrote and rejected liability outright for payment of the metered supply.  The developers informed BWB that they were taking up the question of responsibility of financing the required mains extension with the Estate.  Meanwhile, the sale of at least one of the houses on the Estate had been completed to the third defendant who was by now in occupation and, soon afterwards, sales were completed of two more houses.  In response to a query from the third defendant about the arrangements for the supply of water to his house, BWB wrote on 15th December 1972, informing him of the history, and saying that BWB were waiting for the outcome of the developer’s approach to the Estate.  On the same day BWB wrote to the developers informing them that, in the light of the denial of liability by the Estate, the metered supply was subject to possible termination by BWB, but, stating that the interests of the houses on the site already connected would be respected for the limited period necessary to finance and lay the main requested by the developers.  BWB made clear that it considered the Spring Coppice Supply Pipe unsuitable by reason of its size and situation to be taken over by the Board as a mains supply pipe.

11.	Pausing there, it was only at that point that the developers revealed the arrangements, hitherto unknown to BWB, by which the Estate had, two years earlier, sold the site to the developers’ predecessors in title, granting to them the right to use the Spring Coppice Supply Pipe and to enter on the land between the site and the trunk main (which was retained by the Estate) for the purpose of inspecting, renewing, maintaining and repairing the pipe when necessary.  When the land was sold on to the developers by their predecessors, the sale included the right to make use of the water supply already supplied through the pipe, and the benefit of the easements granted for its repair and maintenance.

12.	On 24th January 1973, BWB wrote to the developers and the Estate making clear that BWB had been ignorant of this arrangement as the Estate had never given statutory notice at the appropriate time that it was vacating the site and no longer required the supply.  It stated that:
“..[the original] arrangement was agreed on the basis that the Estate were remaining fully in control of the development site, that they would continue to be responsible direct to the Board for all consumption or other charges arising at the meter and for the future maintenance of the supply pipe.  This was acceptable to the Board at that time as the Estate owned all the land under which the pipe passed, and from previous experience they always acted promptly and responsibly in attending to any underground leakages which arose from their other meter supplies on the Estate.

The present situation differs from the original concept in that there now exists, presumably, separate freeholders, none of whom would expect to take on in perpetuity the responsibilities of collecting charges from the other owners and paying the Board, maintaining the supply pipe from the meter and locating and repairing any leakages which arise on this pipe and of course paying for excess consumption arising from such leaks.  Furthermore, the scale of the properties built and thus the consumption of water exceeds that envisaged at the outset and complains as to the inadequacies of the supply, which will surely arise, will be directed to the person responsible…

…The agreed terms and conditions relating to this particular supply have ceased to exist and the way is now open for the Board to give due and proper notice to terminate this metered supply and to offer a supply of water by an orderly extension of the Board’s mains as set out in my letter dated 15th December 1972.  Such a main will permit a proper and satisfactory supply to the properties as will provide fire protection.”

13.	The Board then called for the developers’ acceptance of the Board’s terms for constructing the permanent new mains supply.

14.	With the copy of that letter sent to the Estate, BWB forwarded the metered account for the period ending 8th April 1972.  On 30th January 1973 it forwarded an amended account to include an additional sum of £15.56, in respect of water supplies to one of the houses which had been occupied during that period.  BWB stated:
“The amended account, based upon minimum charge, is enclosed herewith and I would particularly draw your attention to the notice on the bottom left-hand corner of the account. [The reference is to the requirement that a consumer give 24 hours’ notice in writing of intention to vacate premises under the Water Act 1945.]  Your letter dated 21st April 1972 may be construed as such notice as this was the first occasion on which it was definitely known that the Estate would not accept responsibility for this metered supply.” 

15.	It appears that, while the first account (i.e. up to 8th April 1972) was paid, the liability for the additional £15.56 was referred to the Estate’s solicitors and there the matter rested for about a year.  However, meanwhile, BWB sent to the developers the metered account for the ensuing period ended 7th October 1972 which the developers refused to pay.

16.	Eventually, on 28th March 1973, in response to a letter from BWB on 22nd March, the Estate wrote:-
“We still are quite certain that we should not be paying this account.  We do not however want to enter into litigation with your Board with whom we have had many friendly dealings in the past.  Until our respective Solicitors have therefore sorted out the situation, we are instructing the Estate Office at West Wickham to send a cheque for £15.56 today.  This payment is entirely without prejudice and we hope that you will do your best to hasten a legal settlement.”

17.	On 30th March 1973 BWB replied:
“Thank you for your letter dated 28th March informing me that you had authorised payment, entirely without prejudice, of the outstanding metered account and I confirm that I have today received a cheque for £15.56. direct from the local Estate Office.

As you say we have had many friendly and useful dealings and I very much regret the situation which arose.  It would appear to me that by the payment of this account, the Estate has discharged its direct responsibilities to my Board for the existing meter supply and I am continuing to press the developers’ solicitors for a speedy legal settlement of the remaining matter in order that the houses may be satisfactorily supplied direct from a proper and orderly extension of the Board’s main.”  (emphasis supplied)

18.	Unfortunately, the southerly extension proposed to connect the BWB trunk main to the site via the road route to the South was not constructed.  The developers went into liquidation, never having accepted any obligation to contribute to its construction.  When that became clear, the Board wrote on 21st November 1973 to each of the occupiers of the houses on the site in the following terms:
“… it has now been decided that the Board, whilst retaining the meter in its present position as a check against possible future leakage, shall charge each of the consumers directly on the basis of a normal unmetered domestic consumer….

I wish to make it quite clear, however, that in deciding to charge normal domestic rates the Board have not changed, nor will change, the status of the very long private joint supply pipe at the point where it leaves the Board’s meter and accordingly the owners or occupiers of all five houses will jointly be held entirely responsible by the Board for the future maintenance, adequacy and prompt repair of this pipe.  I understand the pipe and all necessary rights of access there were conveyed to the developers who no doubt have incorporated these into your own conveyance.

I am writing a similar letter to all the owners concerned…”

19.	In fact, neither BWB nor its successor TWA made any demands upon the individual householders on the site until April 1979.  Thereafter, the defendants received, but refused to pay, the charges demanded of them every six months in respect of water supplied through the Spring Coppice Supply Pipe.  In 1982 TWA, as the successor to BWB, issued proceedings against the defendants, but did not pursue them with any vigour and the proceedings were struck out for want of prosecution.  However, in the face of the continuing refusal of the defendants to pay their water charges, Thames brought separate proceedings against each of the three defendants in November 1995, claiming charges for water and sewage services provided to the defendants since 1989, when Thames succeeded TWA as statutory water undertaker.  The water charges the subject of demands dated 17th February 1991 and 23rd February 1991 were demanded pursuant to the provisions of sections 75-77 of the 1989 Act.  The water charges demanded on 22nd February 1992 and thereafter were demanded pursuant to sections 142-144 of the Water Industry Act 1991 (“the 1991 Act”).  Sections 142 to 144 of the 1991 Act do not differ in any respect material to this case from the provisions of section 75-77 of the former Act.  

The Relevant Statutory Provisions
20.	A water undertaker such as Thames has a duty in relation to premises within its area to supply water for domestic purposes.  The duty is to provide to those premises such a supply of water as is sufficient, so far as those premises are concerned for domestic purposes and to maintain the connection between the undertaker’s water main and the service pipe by which that supply is provided to those premises (s.52(1) of the 1991 Act).  Such duty is owed to, and actionable at the suit of, the consumer (s.54), the consumer being the person who for the time being is liable to pay charges to the undertaker in respect of the supply of such water (s.93).  The provisions which trigger the imposition of the duty of the undertaker are set out in sub-sections (2)-(7) of s.52 of the 1991 Act.  However, the duty of Thames to supply the defendants with water for their domestic purposes has not been in issue on this appeal. 

21.	The charging regime in relation to water supplied by a water undertaker such as Thames is set out in sections 142 to 144 of the 1991 Act which provide as follows:

“142. Powers of Undertakings to charge

(1)	Subject to the following provisions of this Chapter, the powers of every relevant undertaker shall include power – 

(a)	to fix charges for any services provided in the course of carrying out its functions…

(b)	to demand and recover charges fixed under this section from any person to whom the undertaker provides services…

(2)	Subject to sub-section (3) below, the powers conferred by sub-section (1) above shall be exercisable – 

(a)	by or in accordance with the charges scheme under section 143 below; or

(b)	by or in accordance with agreements with the persons to be charged…”.

143.	Charges schemes.

(1)	A relevant undertaker may make a scheme (“ a charges scheme”), which does any one or more of the following, that is to say – 

(a)	fixes the charges to be paid for any services provided by the undertaker in the course of carrying out its functions…

	and….

(b)	makes provision with respect to the times and methods of payment of the charges fixed by the scheme….

(5)	Nothing in any charges scheme shall affect – 

(a)	any power of a relevant undertaker to enter into such an agreement with any person in any particular case as determines the charges to be made for the services provided to that person by the undertaker…” .

144.	Liability of occupiers etc. for charges.

(1)	Subject to the following provisions of this section and except and so far as provision to the contrary is made by any agreement to which the undertaker is a party – 

(a)	supplies of water provided by a water undertaker shall be treated for the purposes of this Chapter as services provided to the occupiers for the time being of any premises supplied…”

The Dispute
22.	By their defences, the defendants denied that Thames has supplied them with water services.  They contended that the water services obtained via the Spring Coppice Supply Pipe were supplied by BWB to the Estate and not to them; that the defendants’ rights to use the pipe for the supply of water were granted by the Estate and that they had no obligation to pay or reimburse Thames for the water supplied.  There was an alternative plea that, if Thames had indeed supplied water services to the defendants, they were ‘inadequate and to an unacceptable standard’.  In the further alternative it was alleged that Thames were in breach of statutory duty in failing to require the defendants’ predecessors in title, namely the developers of the site, to supply the houses on the site with a water supply from a newly constructed mains extension and that, having so failed, were in breach of statutory duty by failing to accept responsibility for full maintenance of the Spring Coppice Supply Pipe, or alternatively by installation of a new water supply, free from the complications of future maintenance by the occupiers of the site.  It was pleaded that, as a result of those breaches, it was not ‘reasonable in such circumstances’ that the defendants should pay for the water services supplied.

23.	The two alternative defences to which I have referred were not pursued at trial; nor was there any counterclaim for alleged breach of statutory duty.  At trial, it was the contention of Thames, accepted by the defendants, that Thames, either by itself or its statutory predecessors, had at all material times made supplies of water through the Spring Coppice Supply Pipe to the premises occupied by the defendants which supplies were, in accordance with S.144(1)(a) of the 1991 Act to be treated as services provided by Thames to the defendants as occupiers for the time being of the premises supplied except insofar as provision to the contrary was made by any agreement to which Thames as undertaker (whether originally or as successor to BWB) was a party.  It was not in issue that, unless the defendants could establish such an agreement, Thames had power under s.142(1)(a) to demand and recover charges fixed under S.142(1)(a) from the defendants as occupiers of their respective premises.  It was the defendants’ case that provision to the contrary had indeed been made by an agreement to which Thames (through its statutory predecessor BWB) was party, whereby BWB agreed with the Estate in or about 1969 to make a supply of water to the Estate on the basis of metered charges payable by the Estate in respect of all water passing through the Spring Coppice Supply Pipe.

The Judgment Below
24.	Before the Judge, the sole issue was whether or not the correspondence and other documents still available in the records of Thames as statutory undertaker, established an agreement between BWB and the Estate which precluded Thames from charging the defendants for water supplied to them as occupiers of their premises.  The case advanced by Thames was that it did not deny that it had a duty to supply mains water to the premises, but that such supply was in fact effected through the Spring Coppice Supply Pipe which was a private service pipe owned by the Estate.  Thames contended that no binding agreement that the Estate would pay for water supplied to the occupiers on the site had ever come into existence and/or that, if it had, it was subject to a condition precedent which was never fulfilled, namely that the development would be undertaken by the Estate as freeholder and not by a private developer.  Accordingly, because the land was sold to a private developer the agreement never came into operation.  However, because, as a matter of fact, Thames did (via the Spring Coppice Supply Pipe) supply mains water to the occupiers for domestic purposes, the defendants were liable to pay Thames’ charges under s.142(1)(b).  The defendants contended on the other hand that, since the agreement reached between BWB and the Estate was not made conditional upon the Estate being the developer of the houses, (albeit that might well have been the understanding of BWB), the water supply was made and maintained pursuant to its provisions, and that, since those provisions had never been replaced by a fresh agreement with the developers or the individual occupiers, that remained the position.

25.	The Judge accepted that submission.  He stated:
“…there was a supply to [the Estate] who subsequently themselves arranged, without reference to BWB, for that supply to sub-supply to Spring Coppice.  I reject the condition precedent argument: it did not matter who owned the freehold of the development.  What mattered was who was to be responsible for the pipe and the supply beyond the main…I accept that BWB never agreed to the proposed development and therefore for the means whereby the development was supplied, but that was at all times the responsibility of [the Estate] under the undoubted agreement between BWB and [the Estate].  If [Thames], through BWB, have released [the Estate] then they cannot unilaterally inflict the consequences on the Defendants.

The original agreement was, indeed as Mr Streatfield-James [for the Defendants] submits, agreed to in order to save [the Estate] money on the provision of a main.  The cost of that now, I am told, would be between £150,000 and £100,000 for the main to be laid along Park Lane ….. the original agreement was that, in consideration of [the Estate] undertaking the work to BWB’s satisfaction and in accepting liability for the maintenance of the pipe and paying the charges, BWB would agree to the pipe across [the Estate’s] private land.  [The Estate] could not ‘wash their hands’, as Mr Streatfield-James put it, of their responsibility unless they ensured that developers entered into a proper agreement with BWB.  By failing to do so, they remained liable.  I accept that submission.  In the result, I accept that the supply of water is and always has been a supply to [the Estate] who, in turn, have supplied the occupiers of Spring Coppice.”

26.	He held that the claims against all three defendants failed.

The Grounds of Appeal
27.	Thames appeals upon grounds which Mr Daiches, who appears for Thames (but did not do so below), accepts were not argued before the judge.  As already indicated, the Judge limited his consideration to whether or not a binding agreement to supply water for the development had been reached with the Estate on the basis and/or whether it contained a condition that the Estate would be the developer of the site.  He gave no direct consideration to the point now argued before us, namely that, whether or not there was an agreement between BWB and the Estate to supply water to the Estate in the form of a metered water supply for which the estate was liable to pay, that agreement was discharged by agreement as from 8th April 1972 when Thames wrote to the Estate in the terms of its letter dated 30th March 1973 (see para 17 above).

28.		It is plain that the Judge had that letter in mind.  In the course of reviewing the history, he referred to it in the following passage:-
“The developers went into liquidation and the water supply has remained unchanged.  [The Estate] declined to pay for Spring Coppice’s water…but made a ‘without prejudice’ payment.  BWB decided to effectively release [the Estate] from further responsibility”

He also observed in the passage quoted at paragraph 23 above that if BWB had released the Estate it could not ‘unilaterally inflict the consequences on the defendants’; adding later that the Estate could not ‘ wash their hands’ of their responsibility.  However, he did not deal directly with (or apparently have argued before him), a positive case that the agreement between BWB and the Estate that the Estate would pay for the water supplied to the occupiers of houses on the site was discharged by agreement.

29.		That is the argument now advanced (and effectively the sole point) in this appeal.  Mr Daiches submits, and rightly, that at the time the agreement was made it was, and thereafter remained, a bilateral agreement between the Estate and BWB and, as such, it could be varied or discharged by agreement in accordance with general common law principles.  He submits that the correspondence clearly reveals the mutual discharge of the earlier agreement between BWB and the Estate that BWB would treat the supply of water to the occupiers of the houses on the site as supplies made and chargeable to the Estate, with the result that thereafter, or at any rate as from 21st November 1973 when BWB so informed the occupiers (see paragraph 18 above), the occupiers were chargeable directly on the basis of BWB’s normal charging rate to domestic consumers, under s.142 of the 1991 Act.  In my view, Mr Daiches is correct for the following reasons.

30.		It is not in issue that a contract came into being in 1969 between BWB and the Estate as evidenced in the correspondence to which I have referred.  Against the background of BWB’s functions and responsibilities as the water undertaker, and on the basis of that correspondence, the substance of the agreement was that, in consideration of the Estate agreeing to comply with BWB’s terms and conditions relating to the laying and connection of the Spring Coppice Supply Pipe (as a private service pipe to be connected to the main) and to pay BWB’s charges on a metered (i.e. measured) basis for water supplied to the site through the pipe, BWB would connect the pipe to its 15 inch main and supply water to the site, treating the Estate as the consumer and the party chargeable in relation to the water supplied.  There appears to have been no express agreement that the Estate would be liable for the repair of the Spring Coppice Supply Pipe.  However, that was the effect of the agreement, because BWB’s statutory obligation to make and maintain the connection to the Estate’s private service pipe did not extend to the service pipe itself.  Finally, although it was anticipated when the agreement was made that it would be of indefinite duration, and that the Estate, as the freehold owner of the site, would wish it to continue in force, there was no agreement either as to duration or notice of termination.

31.	That being so, there was no reason in law why BWB and the Estate should not agree to bring the agreement to an end as between themselves.  The effect which any discharge by agreement might have upon third parties, and in particular upon the occupiers of the houses on the site, was a separate matter, not provided for.  Thus, it seems to me that the judge fell into error when he held that, as a matter of contract between BWB and the Estate, the Estate could not wash its hands of its responsibility to pay for the charges until it ensured that the developers entered into a ‘proper agreement’ as the judge called it, with BWB.  While it is perhaps surprising that BWB, having expressed the view that a new extension was desirable, were prepared to terminate or agree to the discharge of its supply agreement with the Estate before an alternative arrangement had been reached with the developers, nothing constrained them from doing so, provided that they continued to provide a domestic water supply to the occupiers.  

32.	In the event that is what appears to have happened.  By the Estate’s letters of 21st December 1971 and 21st April 1972, it made clear to BWB that it no longer owned the site and (by implication) no longer required that supplies of water provided to the occupiers be treated as provided to the Estate.  In the former letter, the Estate asked BWB to consider charging the new houses a water rate based on their rateable value as on other dwellings, albeit subsequently it directed BWB to the developer to accept liability (see the Estate’s letter of 30th March 1972).  In BWB’s subsequent correspondence with the developer, BWB became aware that the benefit of the use of the Spring Coppice Supply Pipe, with appropriate easements in respect of its maintenance had passed to the occupiers.  In those circumstances, and because it in any event intended at the time to lay a mains pipe along the road to the south of the site at the developer’s expense, BWB decided to release the Estate from its agreement with BWB in respect of water supplied to the occupiers of the site.  BWB accordingly did so by its letter of 30th March 1973 which recorded its position that ‘the Estate has discharged its direct responsibilities to [BWB] for the existing metered supply’.  It is plain that thereafter neither BWB nor the Estate regarded the Estate as under any liability to BWB for any water subsequently supplied through the Spring Coppice Supply Pipe and acted accordingly.  However, BWB did not seek to suspend or interrupt the continued supply of mains water to the occupiers through the Spring Coppice Supply Pipe and it made clear to the occupiers by its letters of 21st November 1973 that it would charge the occupiers in accordance with its statutory right to do so.  That position has continued under Thames as the successor of BWB and TWA.

33.	It seems that the judge’s reluctance to find that the Estate’s liability had been discharged was based on the fact that, at the time the release was granted by BWB, it intended to construct a southerly extension to the main at the expense of the developer, and to eliminate the role of the Spring Coppice Supply Pipe as a long service pipe privately maintained, by connecting the extended main to a relatively short service pipe or pipes to the five houses on the site.  It was a subject of substantial complaint by the defendants before the judge and before this court, (a) that BWB had expressed the view in correspondence that the supply of mains water via the Spring Coppice Supply Pipe was not an adequate arrangement or in the best long term interests of the residents of Spring Coppice and (b) that, unless or until a new mains extension was constructed, the burden of maintenance of the Spring Coppice Supply Pipe lay upon the occupiers of the site in respect of whom it constituted an abnormally long private service pipe crossing the land of another landowner and therefore inconvenient to maintain.  It was these factors, coupled with the defendants’ own view that the pipe was inadequate to give a satisfactory supply to five houses, which led to the defendants’ pleading alternative defences in the form referred to in paragraph 22 above.  However, the incidence of the obligations of maintenance of service pipes connected to the main is not directly relevant to the liability of an occupier to pay for water services supplied by a water undertaker under s.144 of the 1991 Act.  That section deals simply with the charges which may be made to occupiers for the time being of premises supplied with mains water; such liability does not hinge upon the question of who is liable to maintain the service pipe to which the mains connection is made.  Yet that is the matter which seems to have guided the judge in coming to his conclusion.  That said, however, the judge did not have the advantage of argument addressed directly to the point as to whether or not there had been a discharge or release of the Estate from its liability to BWB.

Conclusion
34.	For the reasons I have already given, it is plain to me, that so far as s.144 of the 1991 Act is concerned, as from the end of March 1973 there was no extant provision of the agreement between the Estate and BWB apt to displace the provision in s.144(1)(a) that water supplied to the defendants as occupiers for the time being of the houses on the site should be treated as services provided to them in respect of which Thames had power to demand and recover charges under s.142(1)(b).  It is also plain that, following discharge of the agreement, BWB continued to supply the occupiers of the site (including the defendants) with mains water through the Spring Coppice Supply Pipe on the basis that they would be charged the normal unmetered domestic consumer rate as set out in the letters sent to the occupiers dated 21st November 1973 (see paragraph 18 above).  Finally it is clear that demands for such charges have been made since April 1979, which the defendants have refused to pay.  

35.	It has been explained to us by counsel for the defendants that their refusal to pay has not been based upon the belief that they are entitled to receive a mains water supply free of cost, but upon their opinion that their supplies are not adequate and that the burden of maintenance in respect of the Spring Coppice Supply Pipe and/or the cost of constructing an alternative and adequate mains extension to the south was never intended to rest upon them.  The position of the defendants thus stated is worthy of considerable sympathy; however, it is not one which in itself, amounts to a defence in respect of their liability to pay the water charges claimed by Thames.  The defendants have not sought to prosecute any counterclaim for damages (giving rise to a defence of set-off) based on any breach of statutory duty by Thames in respect of the above matters and I make no observation upon the feasibility of such a claim.  

36.	That being so, I would allow the appeal.

THORPE LJ:

37.	I agree that this appeal should be allowed for the reasons given by my lord, Potter LJ.

ORDER: Appeal allowed.  The judgment below to be set aside.  In the court below the defendants will pay the costs.  There will be judgment against the first defendant in the sum of £1,833.87 and against the second and third defendants each in the sum of £1,324.51.  The claimants to pay the costs in this court, pursuant to the order of Otton LJ.

(Order does not form part of approved Judgment)