WAVERLEY council tenants could potentially claim up to £400,000 in overpayments following a landmark legal case relating to the way local authorities have collected charges for unmetered properties for Thames Water.

In a test case bought by a London council tenant in March, the High Court found Southwark Council, which has an “almost identical” contractual relationship with Thames Water to Waverley, had overcharged housing tenants for their water between 2010 and 2013.

Waverley, like Southwark, regarded itself as acting as an ‘agent’ for Thames Water and received a commission of eight per cent for the provision of billing and collection services.

The eight per cent commission, amounting to around £80,000 per annum, was paid into Waverley’s Housing Revenue Account to support its service to tenants.

The High Court ruled that Southwark - and therefore Waverley, too - was not acting as an agent but a ‘re-seller’ for Thames Water and the commission charges made to tenants were excessive.

The verdict is a ‘double whammy’ for Waverley. It will not only be hit by overcharging claims from tenants dating back six years under the legal “limitation period”, which it has estimated will be between £200,000 and £400,00, but will also lose the £80,000 per annum commission spent on Housing Revenue Account services.

The maximum charge for commission for water ‘re-sellers’ is set by Ofwat. The charge will have to be negotiated with Ofwat when Waverley’s reviews its contractual arrangement with Thames Water and is likely to be less.

At Tuesday’s Executive meeting, members agreed a recommendation that officers calculated what the bill would be, and the method of handling claims from tenants for overpayments should be delegated to Executive by full Waverley Council.

It was also agreed the council should delegate the decision about what arrangement, if any, to agree with Thames Water going forward.

Waverley leader and Executive chairman Farnham councillor Julia Potts said: “When Waverley became aware of this, it felt it was of the utmost importance it communicated that and made sure it had written to the tenants involved.

“There is not much more I want to say at this point. Some 70 tenants are affected, which is quite a significant number.”

Haslemere councillor Carole King said: “All the unmetered tenants with Thames Water have been informed. This relates to a contract signed in 2003 when Waverley was under a different administration.

“The legal costs of handling this and the financial implications could be up to £400,000. Tenants have to be consulted before we make any arrangements or plans.”