Councils investigated for overpaid service bills

Local authorities are being warned they could owe residents million of pounds in overpaid water bills, after a London council was found guilty of overcharging its tenants for waters and sewage services.

The High Court has ordered that Southwark Council refund the overpaid service charges, after it found that Thames Water had been discounting each service invoice because the council was carrying the cost of collection debts.

The court rules that the terms of the agreement were inconsistent with a bad relationship of principal and thus broke the Water Re-Sale Order. Law firm Bevan Brittan has called for all councils to review their arrangements with water companies and carry out a full risk assessment to determine that their billing arrangements fall within the scope of the High Court decision.

Virginia Cooper of Bevan Brittan, said: “Poorly drafted agreements with water companies could have substantial financial implications for many local authorities and social housing landlords.

“Tenants may be able to claim for the recovery of overpaid service charges - and any claims for possession based on rent arrears could be defended on the grounds that overpaid charges should be off-set against any arrears.”