Case No: C/2000/3450
Neutral Citation No [2002] EWCA Civ 05   
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT
(The Hon Mr Justice Tomlinson)

Royal Courts of Justice
Strand, London, WC2A 2LL

Thursday 31 January 2002

B e f o r e :

LORD JUSTICE THORPE
LORD JUSTICE LAWS
and 
MR JUSTICE MORLAND
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	              THE ENVIRONMENT AGENCY		Appellant	
	                                   -  and -		
	        ANGLIAN WATER SERVICES LIMITED	Respondent	

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(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)
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Gerard Clarke (instructed by the Environment Agency for the appellant)
Beverley Lang QC (instructed by Anglian Water Services Ltd for the respondent)

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Laws:
Introductory
1.	This is an appeal relating to part of a judgment of Tomlinson J given in the Administrative Court on 27th October 2000 when he acceded to the respondent’s application for judicial review of four decisions made by the appellant under s.101A(7) of the Water Industry Act 1991 (“WIA”). S.101A was inserted into WIA by s.103 of the Environment Act 1995, after privatisation of the water industry.  Permission to appeal was granted by myself on 21st December 2000.  

2.	The respondent is a water and sewerage undertaker within the meaning of WIA.  By s.101A(7) WIA the appellant is required to determine disputes between sewerage undertakers and owners or occupiers of property as to whether the undertaker owes a duty under s.101A(1) to provide a public sewer.  The four decisions impugned in the proceedings may be described in summary form as follows:

(i) 10th November 1999: that the respondent is under a duty to provide a public sewer to serve the village of Little Bentley;

(ii) 22nd November 1999: that the respondent is under a duty to provide a public sewer to serve the village of Chetwode;

(iii) 29th November 1999: that the respondent is under a duty to provide a public sewer to serve the village of Bent Hill;

(iv) 22nd December 1999: that the respondent is under a duty to provide a public sewer to serve the whole of the village of Wretton (rather than the major part of it) and to start carrying out the works no later than mid 2001.  	

3.	The learned judge quashed all four decisions.  The appellant appeals in respect of two only, those relating to Wretton and Bent Hill.  Many points were canvassed at first instance, but only three are live in this court, two relating to Wretton and one to Bent Hill.  As regards Wretton, it is first said that the learned judge misconstrued s.101A(1): he should have upheld the construction which, as I shall show, was a premise of the appellant’s decision of 22nd December 1999.  This is the first case in which the section has been considered in the courts.  The point of construction is said to be of some general importance.  The second submission on Wretton is that the judge was wrong to accede to an argument advanced by the respondent to the effect that the decision was taken in breach of a legitimate expectation enjoyed by the respondent.  The legitimate expectation is said to have been generated by the terms of a letter from the appellant to the respondent dated 6th February 1998, to which I will come in due course.  As for Bent Hill, the appellant’s decision had proceeded from its rejection as impracticable of a proposal by the respondent to the effect that a private treatment plant would suffice, so that a public sewer was not required.  The judge accepted the respondent’s criticisms of this approach and it is said that he was wrong to do so.

The Statute

4.	By way of introduction to the relevant legislation I should record the submission made by Miss Lang QC for the respondent that although since at least 1944 Parliament has recognised the potential benefits of public sewerage systems in rural areas, it has never been the policy of the legislature to put the whole country onto such systems.  Their provision is costly, and Parliament has always in this context balanced need against cost.  In 1944 the Rural Water Supplies and Sewerage Act was passed.  It introduced a grant scheme to assist local authorities in providing public sewers for rural localities.  The grant available was, I understand, fixed at 35% of the eligible cost.  This scheme continued in being until s.101A entered into force on 1st April 1996.  

5.	By the 1990s local authorities were empowered to requisition public sewers from the water authorities.  The power continues today, and is currently to be found in s.98 WIA.  I should set out part of this section (as the judge did), not least since there is some common use of language between that section and s.101A.

“98(1) It shall be the duty of a sewerage undertaker (in accordance with section 101 below) to provide a public sewer to be used for the drainage for domestic purposes of premises in a particular locality in its area if- 

(a) the undertaker is required to provide the sewer by a notice served on the undertaker by one or more of the persons who under subsection (2) below are entitled to require the provision of the sewer for that locality; 

(b) the premises in that locality the drainage of which would be by means of that sewer are 

(i) premises on which there are buildings; or 

(ii) premises on which there will be buildings when proposals made by any person for the erection of any buildings are carried out; 

and 

(c) the conditions specified in section 99 below are satisfied in relation to that requirement. 

(2) Each of the following persons shall be entitled to require the provision of a public sewer for any locality, that is to say 

(a) the owner of any premises in that locality; 

(b) the occupier of any premises in that locality; 

(c) any local authority within whose area the whole or any part of that locality is situated; 

(d) where the whole or any part of that locality is situated in a new town, within the meaning of the New Towns Act 1981- 

(i) the Commission for the New Towns; and 

(ii)… the development corporation for the new town…;

and 

(e) where the whole or any part of that locality is situated within an area designated as an urban development area under Part XVI of the Local Government, Planning and Land Act 1980, the urban development corporation.”

6.	Then s.101A:

“(1) Without prejudice to section 98 above, it shall be the duty of a sewerage undertaker to provide a public sewer to be used for the drainage for domestic sewage purposes of premises in a particular locality in its area if the conditions specified in subsection (2) below are satisfied.

(2) The conditions mentioned in subsection (1) above are –

(a) that the premises in question, or any of those premises, are premises on which there are buildings each of which, with the exception of any shed, glasshouse or other outbuilding appurtenant to a dwelling and not designed or occupied as living accommodation, is a building erected before, or whose erection was substantially completed by, 20th June 1995;

(b) that the drains or sewers used for the drainage for domestic sewerage purposes of the premises in question do not, either directly or through an intermediate drain or sewer, connect with a public sewer; and

(c) that the drainage of any of the premises in question in respect of which the condition specified in paragraph (a) above is satisfied is giving, or is likely to give, rise to such adverse effects to the environment or amenity that it is appropriate, having regard to any guidance issued under this section by the Secretary of State and all other relevant considerations, to provide a public sewer for the drainage for domestic sewerage purposes of the premises in question.

(3) Without prejudice to the generality of subsection (2)(c) above, regard shall be had to the following considerations, so far as relevant, in determining whether it is appropriate for any sewer to be provided by virtue of this section –

(a) the geology of the locality in question or of any other locality;

(b) the number of premises, being premises on which there are buildings, which might reasonably be expected to be drained by means of that sewer;

(c) the costs of providing that sewer;

(d) the nature and extent of any adverse effects to the environment or amenity arising, or likely to arise, as a result of the premises or, as the case may be, the locality in question not being drained by means of a public sewer; and

(e) the extent to which it is practicable for those effects to be overcome otherwise than by the provision (whether by virtue of this section or otherwise) of public sewers, and the costs of so overcoming those effects.

(4) Guidance issued by the Secretary of State under this section may –

(a) relate to how regard is to be had to the considerations mentioned in paragraphs (a) to (e) of subsection (3) above;

(b) relate to any other matter which the Secretary of State considers may be a relevant consideration in any case and to how regards is to be had to any such matter;

(c) set out considerations, other than those mentioned in paragraphs (a) to (e) of subsection (3) above, to which (so far as relevant) regard shall be had in determining whether it is appropriate for any sewer to be provided by virtue of this section;

(d) relate to how regard is to be had to any such consideration as is mentioned in paragraph (c) above;

(e) without prejudice to paragraphs (a) to (d) above, relate to how a sewerage undertaker is to discharge its functions under this section.

…

(7) Any dispute between a sewerage undertaker and an owner or occupier of any premises in its area as to –

(a) whether the undertaker is under a duty by virtue of subsection (1) above to provide a public sewer to be used for any such drainage of those premises as is mentioned in that subsection;

(b) the domestic sewerage purposes for which any such sewer should be provided; or

(c) the time by which any such duty of the undertaker should be performed,

shall be determined by the Environment Agency, and may be referred to the Environment Agency for determination by either of the parties to the dispute.

(8) The Environment Agency –

(a) shall notify the parties of the reasons for its decision on any dispute referred to it under subsection (7) above; and

(b) may make any such recommendations, or give any such guidance, relating to or in connection with the drainage of the premises or locality in question as it considers appropriate.

(9) The decision of the Environment Agency on any dispute referred to it under subsection (7) above shall be final.

…”  

The Facts

Wretton

7.	On 9th December 1996 King’s Lynn and West Norfolk Borough Council applied to the respondent on behalf of 145 residents for provision of a public sewer for the village of Wretton.  The council indicated that Wretton had been notionally scheduled for requisition under s.98 by the year 2002.  On 6 January 1998, in the course of its appraisal procedure, the respondent wrote to the appellant attaching a plan which showed pollution problems in four areas of Wretton (A, B, C and D), and also a plan of a proposed sewerage scheme.  It is I think implicit in this documentation that the whole village of Wretton was being taken as the potential “locality” for the purposes of s.101A.  With respect to area C the letter stated:

“Pollution of the ditch to the south of Emmerdale Farm has been observed.  We believe this pollution to be a localised issue as percolation tests in the area have indicated that septic tanks should operate effectively.”     

On 6th February 1998 the appellant replied.  The letter was sent from an area office.  This is the document relied on to support the respondent’s case as to legitimate expectation.  This is what it said:

“FIRST TIME SEWERAGE APPLICATION – WRETTON

Thank you for your letter and meeting with David Batterham of our Kings Lynn office on 6th January 1998 to discuss the above.

… 

Area C indicates minimal pollution arising probably from one dwelling only, can be dealt with accordingly by the Agency and does not need to be addressed within the proposed scheme.

The Agency therefore has no objection to your proposals…”  

The proposals, of course, did not include the provision of public sewerage for Area C.

8.	In the course of its appraisal procedure the respondent distributed questionnaires to local residents.  Mr Gathercole, of Emmerdale (in Area C), replied saying that he had a septic tank which was emptied every six months and he had suffered no environmental or amenity problem as a result of his drainage system.  The respondent’s appraisal was completed on 7th May 1998.  It accepted that the respondent should undertake the duty to provide public sewerage for Areas A, B and D.  As regards C the Appraisal Report set out precisely what had been said in the respondent’s letter of 6th January 1998:

“Pollution of the ditch to the south of Emmerdale Farm has been observed.  We believe this pollution to be a localised issue as percolation tests in the area have indicated that septic tanks should operate effectively.  (See letter from EA [sc. the appellant] in Appendix E)” 

The letter there referred to was the appellant’s letter of 6th February 1998.  Under the heading “Review of Possible Options” it was stated in the report:

“Investigations have identified that part only of the village has a problem which cannot be easily rectified, namely the properties in areas A, B & D.  Options to solve the problems in these areas have been termed ‘minimum duty’ options.  Options for a complete village scheme have also been considered to enable any possible ‘minimum duty’ solution to be compatible with future expansion.” 

The document proceeded to set out five possible options.  The first was a minimum duty option for cesspools for individual properties.  This of course would not have involved any public sewerage system, and the author of the report anyway considered that there might be long term problems which this option could not resolve.  The second and third options were both “vacuum sewerage” options, respectively “minimum duty” (excluding Area C) and “complete village” (including Area C).  They would each involve the installation of a vacuum pumping station.  Options 4 and 5 were “gravity sewerage” options (again, respectively “minimum duty” and “complete village”).  Either of these would involve the installation of two submersible pumping stations.  Each of the five options was costed, by reference both to capital cost and NPV (“net present value”) cost.  The NPV cost is arrived at by application of a formula whose mysteries, we are assured, it is unnecessary for us to penetrate.  Under “Conclusions and Recommendations” the report stated:  
    
“Anglian Water has an obligation under the Act to provide a Public Sewer to areas where there exists [sic] problems and the Public Sewer is the most economic solution.  In the case of the central area of Wretton where amenity and pollution problems exist, a Public Sewer is the most economic solution and therefore on financial grounds the recommendation is Gravity Sewerage Option 1: Minimum duty scheme.  This scheme will permit future expansion of the catchment if the business case was justified.” (respondent’s emphasis)

This is what I have called Option 4.  It is worth noticing the estimated relative NPV costs of the four public sewerage schemes, which were as follows.  Option 2: £765,422; Option 3: £1,223,538; Option 4 (recommended): £713,250; Option 5: £1,612,496. 

9.	At length the respondent issued a decision, set out in a letter dated 20th August 1998 to the Principal Environmental Health Officer of the King’s Lynn and West Norfolk District Council:  

“… I confirm your application for a public sewer to be provided by Anglian Water under Section 101A of the Water Industry Act 1991 has now been determined.
It is not considered appropriate to provide a public sewer for the entire village in this instance, since the surveys which have been undertaken show that the environmental or amenity problem is restricted to certain areas.
… it is considered that the most appropriate long term economic solution is to provide a public foul sewer to serve the areas affected (areas A, B & D).
The ‘minimum duty’ proposed option (estimated cost £600K) for sewering the problem areas (some 51 properties) of the village is shown [on] the enclosed plan.
The next stage is for the detailed design to be carried out and the scheme will then be prioritised into Anglian Water’s capital programme.  Unfortunately at this stage it is not possible to give an accurate date when work will start on the site but it is unlikely to be before mid 2001.”

The letter proceeded to indicate that “[a]ny owner or occupier affected by this decision is entitled to appeal to the Environment Agency by virtue of subsection (7) of Section 101A”.

10.	On behalf of the villagers the District Council lodged such an appeal, advancing two contentions: (1) that the whole village – and thus Area C – should be included in the scheme, and (2) that there should be an earlier start date to the work.  So the matter went before the appellant under s.101A(7).  Its decision letter, challenged in these proceedings, was as I have said issued on 22nd December 1999.  The letter indicates that the conditions stipulated in s.101A(2)(a) and (b) are satisfied.  It then addresses (c).  The appellant accepts (paragraph 8) that there are sewage and drainage problems in the locality of Wretton, in Areas A, B, C and D.  Having referred to the Secretary of State’s Guidance issued (under s.101A(4)) in April 1996, it concludes (paragraph 14) that septic tanks are not suitable for the local conditions in question, so that the difficulties could not be overcome by repair and reconstruction.  The cesspools option is implicitly rejected.  In paragraph 15 the respondent’s recommended option is described, it being made clear that it does not include Area C.  Then:    

“16. The map provided by the Applicant [sc. the Borough Council] to the Company [the respondent] clearly shows Area C as part of the locality for the application.  Furthermore in support of their application… the applicant states that the whole village is included in the application…  The Agency finds that the locality for the purposes of this decision is those properties identified in the Applicant’s map which encompasses the substantial area of the village, but excludes certain outlying individual properties.

17. The provision of First Time Sewerage for the whole village of Wretton is therefore the only remaining option.”
 
The “therefore” springs from the appellant’s construction of s.101A, which the learned judge rejected; and I shall of course come to it.  I should read paragraphs 19 - 21:

“19. The Agency finds that Area C is part of the village of Wretton and are premises in a particular locality for the purposes of this determination. 

20. For the reasons set out above, the Agency finds that the duty to provide a public sewer applies to the village of Wretton and that the Company is under a duty to provide a public sewer.

21. The duty to provide First Time Sewerage is independent of the AMP3 submission and the Company should provide a start date for the scheme of no later than mid 2001.”

Bent Hill

11.	On 2nd April 1998 Mr Drinkwater, on behalf of himself and four other property owners, applied to the respondent, seeking first-time public sewerage at Bent Hill where the dwellings were served by septic tanks save for Bent Hill Barn, which had its own treatment plant.  This followed a letter which had been written to Mr Drinkwater by the appellant on 10th November 1997, stating that tests had shown that effluent from Mr Drinkwater’s septic tank was being discharged into a ditch behind Bent Hill Farm.  The discharge constituted an offence which “needs to be addressed.  There are a number of options available to you which you should consider, the preferred one from an environmental aspect being connection to the foul sewer.”  Then reference was made to s.101A and the respondent’s duty under it, and other matters.

12.	The respondent made various appropriate enquiries and carried out an appraisal.  In due course a “Business Case Appraisal” report was produced, I think in December 1998.  Paragraph 1 of the report stated in part: 

“The Environment Agency are aware of two properties directly discharging foul effluent from Septic Tanks directly to an open ditch…”

The two properties were Bent Hill Farm and The Bungalow.  The latter was Mr Drinkwater’s property.  When the respondent’s officials or agents carried out their inspection, sewage fungus “was evident” at the point of discharge into the ditch (paragraphs 2.2, 2.3).  Paragraph 2.4 concluded that septic tanks were an unsuitable means of drainage in the area having regard to the nature of the soil and the groundwater level.  Three options for dealing with the problem were put forward at paragraph 3:  

“OPTION 1: The provision of a gravity sewer from Bent Hill to Buckingham Industrial Park.  The total capital cost has been estimated to be £95,700 and the total life cost £87,434.

OPTION 2: The residents to install and maintain a package treatment plant with sufficient capacity to serve a population of twelve…  The capital expenditure is expected to be around £8,000 and the total life cost £13,336.

OPTION 3: To replace the existing Septic Tanks with Cesspools at a capital cost of £20,000 and total life cost £94,658.” 

Of these only Option 1, of course, was for a public sewer.  The respondent’s recommendation, at paragraph 4, was for Option 2.  The NPV cost of Option 2 was £13,336 as opposed to £87,434 for Option 1 (and £94,658 for Option 3).

13.	On 25th January 1999 the respondent sent its decision letter to Mr Drinkwater, indicating that Option 2, the private package treatment plant, was “the most cost effective solution”.  Option 2 would, of course, have to be installed at the residents’ own cost.  Mr Drinkwater and his neighbours exercised their right of appeal to the appellant under s.101A(7).  They submitted written representations.  Responding to the respondent’s choice of Option 2, they said:    

“We consider that this recommendation is hugely flawed.  We are well aware that to discharge untreated effluent into a water course is illegal and unacceptable.  However, it must be recognised that whatever system we adopt at Bent Hill will result in surplus treated waste water having to be eliminated from the package treatment plants.  In our opinion the issue is not the treatment of the sewage which we are well aware can be accommodated by means of a packaged sewage treatment plant.  The issue is the elimination of the surplus water produced by each property, whether treated or not…
We are adamant, therefore, that whatever system is adopted the flooding at Bent Hill will continue.” (original emphasis)

The residents advanced other arguments, and expressed their view that “the only satisfactory option available is for the provision of a connection directly into Anglian Water’s main sewer”.

14.	The respondent submitted a considered reply to the appellant on 29th March 1999 answering the points that had been made, including the argument about surplus water.  On 28th May 1999 the appellant made further enquiries of the respondent.  One of these, relating to Option 2, was as to the cost of purchasing a site for the private treatment plant and associated matters.  To this the respondent replied on 14th July 1999 (the letter dealt with many other points also): 

“Costs relating to the purchase of a site have not been included as there is adequate land available already belonging to the applicants on which the treatment plant could be located.”

After further enquiries raised by the appellant, the respondent said this on 28th September 1999:

“2. It has been assumed that a private treatment plant would be sited on land presently owned by one or more of the households currently contributing to the pollution problem.  For this reason no allowance has been made for costs associated with land purchase.  No precise site for the location of such a plant has been identified.
3. There is unlikely to be a need for any security fencing to a privately owned treatment plant…  This unit is capable of supporting light pedestrian traffic.  A simple, low cost timber post and rail fence or alternatively a few bollards could be used to prevent vehicular access over the unit if this was a possibility.  
…
5. …  I understand that you are seeking confirmation as to whether the Bent Hill residents have given any form of undertaking that they would readily connect to a private plant.  Clearly the householders are not in favour of this option since they have formally appealed against Anglian Water’s decision relating to their application.  One must realistically expect therefore that they would be unwilling to connect.  Notwithstanding this point, it has been acknowledged by them that the current septic discharges into the watercourse are no longer legal and they are therefore under pressure to resolve that situation.”   

15.	This letter was copied by the respondent to Mr Drinkwater, who had in fact written an earlier letter to the appellant, on 14th July 1999, which as I understand it was not disclosed to the respondent before the judicial review proceedings.  In it he said: 

“We consider that a combined package treatment plant applicable to all of the properties on the Bent Hill project is not a feasible solution to our problems.  There are always major legal considerations to be taken into account when providing a communal type of system and, should it be found that the Environment Agency/Anglian Water reject our applications then single individual plants will be the preferred solution.”

Mr Drinkwater also disputed the respondent’s costings, as he did again in a further letter of 30th September 1999.  The respondent’s engineer, Mr Cartwright, has replied to these points in a further statement made for the purposes of the judicial review, but in light of the nature of the issues that fall for determination, I need not go into it. 

16.	The appellant’s decision on the residents’ appeal was given in a letter dated 29th November 1999, as I have indicated.  The letter briefly summarises the background, and refers to s.101A and the Secretary of State’s Guidance.  It sets out the options described by the respondent and records the respondent’s preference for Option 2.  Then it says this: 

“15.  No evidence has been provided by the Company [the respondent] that land is available for a private treatment plant.  Furthermore there is no evidence that agreement could be reached by the residents on the location, maintenance or operation of the plant.  Option 2 cannot therefore not [sic – clearly not is unintended] be considered as a practicable solution.
16.  Agency Policy dated 21 May 1999 does not accept Cesspools as a viable long-term sewerage option.  In applying this Policy Cesspools are not an appropriate solution in this case. 
17.  Option 1 the provision of First Time Sewerage is the most cost effective solution.

DECISION

…
19.  The Agency finds that the environmental and amenity problems at Bent Hill cannot be overcome practicably, so as to solve the problem in the long term, by either the repair, proper maintenance or reconstruction of the existing systems.  The most practicable and cost-effective solution is the provision of First Time Sewerage.
20.  For the reasons set out above, the Agency finds that the duty to provide a public sewer applies to Bent Hill and that the Company is under a duty to provide a public sewer.” 

17.	That is a sufficient recital of the facts relating to Wretton and Bent Hill for the purpose of confronting the issues which we must determine.

Wretton – the True Construction of s.101A

18.	This is the issue said to be of some general importance.  Mr Clarke’s submission for the appellant is simple to state.  It is that if (the conditions set out in s.101A(2)(a) and (b) being met) the drainage of any of the “premises in a particular locality” under consideration gives or may give rise to adverse effects as contemplated by s.101A(2)(c) to the extent that it is appropriate within the subsection’s terms to provide a public sewer, then the sewer must be provided to all of those premises.    

19.	This construction arises as follows.  The words “the premises in question” in subs.(2)(c) must cross-refer to the words “premises in a particular locality” in subs.(1) (the expression “the premises in question” appears also in subs.(2)(a) and (b), where it must bear the same cross-reference).  Accordingly, “the premises in question” and “premises in a particular locality” must have the same reach or subject-matter: in short, “the premises in question” means all of the “premises in a particular locality”. 

20.	It is easy to see the bearing of this construction on the approach taken by the appellant to its task under s.101A(7) in relation to Wretton.  It drives the reasoning in the decision letter of 22nd December 1999, whose relevant paragraphs I have set out above at paragraph 10.  There is no suggestion that Area C itself needs public sewerage.  As regards that, there is every reason to suppose that the appellant agreed with the respondent’s conclusions in their letter of 6th January 1998, the Appraisal Report, and the letter of 20th August 1998.  Indeed the appellant had stated as much on 6th February 1998, in the letter said to give rise to an enforceable legitimate expectation.  The appellant’s decision was to the effect that since (a) the relevant “locality” for the purposes of s.101A(1) includes Areas A, B, C and D, and (b) the provision of a public sewer is appropriate having regard to problems in A, B and D (but not C), “the provision of First Time Sewerage for the whole village of Wretton is therefore the only remaining option” (paragraph 17 of the decision): if one (or some), then all.  Area C was included as a beneficiary of the appellant’s decision that the respondent should provide a public sewer only because of the appellant’s construction of s.101A which I have described.  

21.	This construction is in my judgment liable to produce irrational results in the statute’s application.  First, it amounts to a straitjacket: its rigidity drives the s.101A duty to provide a public sewer to apply where it is not needed, as has happened in the Wretton case in relation to Area C.  Secondly, it may I think result not only in over-provision, but in some cases in under-provision.  Mr Clarke submitted, plainly correctly on any construction of the section, that in deciding whether to provide a public sewer regard had to be had to all the factors enumerated at (a) – (e) in subs.(3), including cost (((c)).  In a notional case where there are, say, twenty premises in the chosen locality, but on the facts drainage by public sewer is indicated in ten, but not at all in the case of the other ten, on the appellant’s argument the cost to be considered is that of providing the public sewer to all twenty and not only to the ten that need it.  I assume there might be cases in which the costs aspect could be decisive.  Thirdly (though I should say I do not think this point was distinctly put in argument) I think the appellant’s construction might lead to strained and artificial interpretations of the term “locality”, and perhaps to arid debates, in court or out, as to whether a locality had been correctly or appropriately selected (by the respondent in the first instance, and then by the appellant under s.101A(7)): the selection, or definition, of the “locality” will on the appellant’s construction determine the number and identity of the premises which are to be candidates for public sewerage provision, and will therefore be likely to be controversial. 

22.	I did not discern in Mr Clarke’s submissions any substantive answer to these difficulties.  That said, however, the appellant’s argument as to the identity between “the premises in question” and “premises in a particular locality” is in my judgment plainly right.  The phrase “the premises in question” as it is used in subs.(2)(a), (b) and (c) must mean the same as between those sub-paragraphs and, no less plainly, must refer back to “premises in a particular locality” in subs.(1) and bear the same meaning and have the same reach and reference as that expression.  I do not think, however, that this concludes the construction issue in the appellant’s favour.  It is central to the appellant’s argument that “premises in a particular locality” means all the premises in that locality.  But this is by no means self-evident.  If in subs.(1) “the drainage for domestic sewerage purposes of premises in a particular locality” might (according to the exigencies of the particular case) refer only to some of the premises in the locality, the straitjacket which the appellant’s construction imposes on the circumstances in which the s.101A duty may arise is at once struck off, without offence to the identity of “premises in a particular locality” and “the premises in question”.   

23.	This approach – to the effect that “premises in a particular locality” in subs.(1) does not have to mean all the premises in the locality – is supported, though perhaps modestly, by the absence of the definite article (“premises…”, as opposed to “the premises…” may mean some only of the premises).  It may also be supported by the terms of s.101A(3)(d): “… the premises or, as the case may be, the locality in question not being drained…”  The distinction between premises and locality suggests the distinction between some and all: I cannot immediately see what “drainage of a locality” might mean other than “drainage of all the premises in the locality”.  In addition I think the approach I have put forward gets help from the terms of WIA s.98(1)(b), which I have set out in paragraph 5.  The provision there made suggests, in my view, that there will be cases where some but not all “premises in a particular locality” will be drained to a public sewer pursuant to the subsection.  The words in s.98(1)(b) “the premises in that locality the drainage of which would be by means of that sewer” (my emphasis) tend to indicate that not all the premises in the locality would be so drained.  

24.	On the other hand, the appellant’s construction may be said to find support in the way in which s.101A(2)(c) is framed.  In summary the provision there made is to the effect that adverse environmental effects resulting from the drainage of any of “the premises in question” may make it appropriate to provide a public sewer for “the premises in question”.  The argument is that the contrast between “any of the premises…” (my emphasis) and “the premises…” is a contrast between some and all, and so supports the appellant’s construction: “the premises in question”, and therefore “premises in a particular locality” in s.101A(1) mean all such premises.

25.	I see the linguistic force of that approach.  But in my view it does not carry the appellant home.  Where, as in these two cases (and I would suppose generally) the process starts with an application being made to the sewerage undertaker to provide a public sewer, the premises covered by the application might constitute all, or only some, of the premises in what might naturally be regarded as a locality in the undertaker’s area, such as a particular village.  I do not see that the terms of the application will define the locality for the purposes of s.101A(1).  In practice, therefore, there is no particular reason to suppose that all the premises in a particular locality will be in play in any given case at all; they may be, they may not be.  So the contrast in s.101A(2)(c) between “any of the premises…” and “the premises…” is perfectly well satisfied by taking the latter – “the premises…” – as referring to the premises under consideration following an application to the undertaker.  That is not to say that the subject-matter in every case of “premises in a particular locality” and “the premises in question” must always strictly refer to those premises in respect of which application is made to the undertaker.  I see no reason why the application premises should not be added to, or subtracted from, the premises being considered respectively by the undertaker and under s.101A(7) by the appellant, as each body considers the case.  “Premises in a particular locality” and “the premises in question” may be conditioned accordingly.

26.	For all these reasons I would hold that “premises in a particular locality” does not necessarily import all the premises situated in the locality.  It refers to those premises, within a particular locality, being considered for public sewerage by the undertaker and, where there is a s.101A(7) dispute, the appellant.  And the number and identity of such premises may change in the course of those considerations. 

27.	The judge correctly rejected the appellant’s construction at paragraphs 77 and 78 of his judgment, though with respect I do not think his reasoning acknowledges the identity between “premises in a particular locality” and “the premises in question”.  For the reasons I have given, while this is a true identity, it does not have the consequence – if some then all – for which the appellant contends.  

28.	It follows if my Lords agree that the appellant’s decision in the Wretton case was rightly quashed, since it plainly depended on an erroneous construction of s.101A.  

Wretton – Legitimate Expectation

29.	That would suffice to dispose of the appeal in relation to Wretton, but in deference to counsel’s arguments I will also consider the point as to legitimate expectation, albeit shortly.  In my judgment the respondent’s submission on this part of the case is, with respect to Miss Lang, a thoroughly bad one.  I repeat for convenience the statement in the appellant’s letter of 6th February upon which the respondent relies:

“Area C indicates minimal pollution arising probably from one dwelling only, can be dealt with accordingly by the Agency and does not need to be addressed within the proposed scheme.

The Agency therefore has no objection to your proposals…”  
 
As I have recounted, this letter was referred to in the respondent’s Appraisal Report, which followed completion of its appraisal of the Wretton application on 7th May 1998.  

30.	The respondent referred in this court and before the judge below to the leading case of Coughlan [2000] 2 WLR 622 decided in this court, Lord Woolf MR as he then was presiding.  In light of my view of this point’s merits, with great respect I need not cite any of the text.  At paragraph 55 the judge said:

“Elementary fairness in my view required the Agency to put Anglian Water on notice if it intended to adopt another approach in its determination…  There is no suggestion that the Agency is bound for all time by the pronouncement [viz. in the letter of 6th February 1998] but at the very least it should have given notice of its intention to approach the matter differently, so that Anglian Water could address the issue.”

Then, purporting to apply Coughlan, the judge said at paragraph 56: 

“Firstly [the appellant] did not bear in mind before deciding whether to change its stance in relation to Area C the previous representation which it had made on that topic nor, in my judgment, did it give proper weight to the implications of changing its stance.  This amounted to Wednesbury unreasonableness.  Secondly, by changing its stance in relation to Area C without giving Anglian Water any advance warning that it might do so and without considering the potential detrimental effect on Anglian Water, the Agency acted so unfairly towards Anglian Water that it abused its power.  The Agency has not shown any overriding interest which could possibly justify its action.”

31.	I will accept for present purposes (though the appellant hotly disputes it) that the letter of 6th February 1998 contains a sufficiently clear promise of future conduct.  The difficulty is that the judge’s reasoning wholly ignores the nature of the appellant’s statutory functions.  Once a dispute was referred to it under s.101A(7), as happened here, the appellant’s undoubted duty was to decide the dispute impartially and even-handedly.  In consequence, the appellant was at least required to bring an open mind to the facts where they were in contention.  If it approached its task with a presumptive bias in favour of the respondent’s position on Area C, in my judgment that would have been unlawful.  Elementarily, the respondent had no legitimate expectation that the appellant would adopt an unlawful stance.  It should have assumed that the appellant would deal with the case even-handedly, whatever it had said before.  It was not entitled to assume that the appellant would stand on the letter of 6th February 1998 unless it issued a warning that it was minded to do otherwise.  For these reasons the legitimate expectation argument is bad in principle.  I accept, for what it is worth, that the appellant might have been wiser to express itself in more guarded terms than it did on 6th February 1998.  

32.	But this argument is bad for another reason also.  The appellant’s decision on Wretton was driven by its construction of s.101A.  If it had construed s.101A correctly, it would presumably have concluded that Area C did not need to be served by a public sewer; and such a view would, of course, have been consistent with the respondent’s putative legitimate expectation.  But if the appellant’s construction of s.101A(1) had been the right one, then it would have been bound to follow and apply it; and in that case its conclusion – the conclusion which in fact it reached on Wretton – could not have been impugned on legitimate expectation grounds, because the appellant would have had no choice but to arrive at it.

33.	The legitimate expectation argument is misconceived, and the judge ought not to have acceded to it.

Bent Hill – Merits Review of the Appellant’s Decision

34.	Mr Clarke submits that the judge usurped the appellant’s statutory role by (in effect) re-taking the merits decision on Bent Hill for himself.  The judge considered that there was a connection between the issue of construction of s.101A and the Bent Hill challenge.  He said:

“31…  The section has a much more complex structure than the imposition of a prima facie obligation where the drainage of premises is having an adverse effect on environment or amenity.  The obligation to provide a public sewer for such premises only arises where it is appropriate.  The conclusion whether it is appropriate is in turn informed by a consideration of the practicability test in subsection (3)(e).  It is therefore simply wrong to speak of a prima facie obligation on proof of adverse environmental effects.

32. That being the case it cannot in my judgment be correct to approach the matter on the footing that there is in this respect an onus on the sewerage undertaker which it must discharge.  There is also another consideration which is that such a burden would, in my judgment, in most if not in all cases be simply impossible for the sewerage undertaker to discharge.  For so long as there is the prospect of the provision of public sewerage at ‘public expense’, it seems to me inevitable that the residents concerned are bound to indicate that no one of them is prepared to make land available for the construction of a private plant and they are bound to indicate that co-operation as to sharing of the costs of construction, maintenance and operation will not be forthcoming.  I do not mean that such indications would be given other than in good faith…
 
33. Furthermore it seem to me plain that the Agency’s [appellant’s] approach to this issue proceeds upon the assumption that the residents of affected premises can impose upon sewerage undertakers a duty to provide them with public sewerage simply by refusing to co-operate amongst themselves.  This however overlooks that the Agency wearing its different, regulatory and enforcement hat has powers to compel those residents to remedy the unlawful discharges from their properties…”

Then specifically as regards Bent Hill, the judge recounted the summary of the facts contained in the statement of Mr Gallagher, which concluded with the sentence:

“In view of the absence of an identified or agreed location for the suggested [private treatment] plant, or full costings for this, the Agency determined that Option 2 was not a practicable solution and that Anglian Water was [under] a duty to provide first time sewerage.”

This was no doubt intended to reflect the relevant terms of the appellant’s decision letter of 29th November 1999, which I have set out.  The judge continued:

“35…  Anglian Water’s view on this was that it was apparent that there was sufficient land in the ownership of the residents on which to site a plant, and that it was not for Anglian Water to tell them where to site it.  The Agency says that Anglian Water should at the very least have given them a clue as to where it might go but that they failed to do even that bare minimum.

36. It is important that the Court should not be drawn into the merits of the dispute.  It may be that it is not practicable to construct a private package treatment plant at Bent Hill but I am quite satisfied that the Agency has not as yet properly considered that question.  It must do so with an open mind bearing in mind the existence of its regulatory and enforcement powers, and bearing in mind also that, in my judgment, Parliament in enacting this complex section cannot be assumed itself to have been expressing a disposition towards public provision of sewerage.  Parliament has sought to strike a balance and has entrusted the Agency with the task of weighing the factors.  Parliament could very easily have said that where there are adverse environmental or amenity effects then there will be an obligation on the sewerage undertaker to provide public sewerage.  It has not done so.  Parliament must be taken to have envisaged that there will be cases in which private sewerage remains the appropriate cost-effective option.  Furthermore it should not necessarily be assumed that coercion will in such circumstances be necessary, although no doubt it is there in reserve in case of need.
In many if not most cases those who are producing the adverse environmental or amenity effects will themselves be suffering therefrom and may be very ready to take the appropriate steps or where necessary to co-operate amongst themselves once it is clear that public sewerage will not be provided.  The Bent Hill decision must be quashed…”

35.	On this part of the case I am in agreement with the judge.  Mr Clarke’s charge that he has arrogated to himself the authority to overturn the appellant’s decision on its factual merits is not made out.  Indeed the judge was at pains to disclaim any such approach.  As I understood him Mr Clarke submitted that the judge impermissibly differed from the view taken by the appellant as to what was and what was not practicable.  In my judgment he did no such thing.  Certainly, he stated (paragraph 36) that the appellant had not yet properly considered the practicability of a private treatment plant.  But it is clear that that conclusion sprang from his view (paragraph 33) that the appellant’s approach proceeded from a false premise, namely that the residents of affected premises could, in effect, impose a duty on the undertaker to provide a public sewer simply by refusing to agree between themselves as regards private provision.  

36.	In my judgment the judge was right.  I repeat for convenience paragraph 15 of the appellant’s decision letter of  29th November 1999:    

“No evidence has been provided by [the respondent] that land is available for a private treatment plant.  Furthermore there is no evidence that agreement could be reached by the residents on the location, maintenance or operation of the plant.  Option 2 cannot therefore be considered as a practicable solution.”

The absence of evidence about availability of land, and as to agreement between the residents, is here treated as conclusive of the question whether a private treatment plant is practicable.  But there is nothing to show that the respondent’s view that “there is adequate land available already belonging to the applicants on which the treatment plant could be located” (letter 14th July 1999) was in any way flawed.  And I see not the slightest basis upon which to conclude that it was for the respondent to show that between them the residents were willing as well as able to provide a particular site for a private plant.  More important, perhaps, is this: to treat agreement among the residents as a sine qua non of a private scheme’s practicability effectively puts the provision of public sewerage at the residents’ choice.  That is an approach rightly condemned by the judge at paragraph 33 which I have already cited, and it demonstrates the application of the false premise to which I have referred.
   
37.	Indeed I would regard the bare unwillingness of the residents to co-operate in the provision of a private scheme as legally irrelevant to the decision whether or not to provide public sewerage.  Their reasons for declining to agree to a private scheme might, of course, be highly relevant, depending on the facts and circumstances of the case.  In this case, in the conventional language of our public law, the appellant took into account an irrelevant consideration in allowing its decision to be driven by the absence of agreement among the residents.  In consequence (as in effect the judge held) it failed to embark upon any objective consideration of the practicability of a private scheme.  The Bent Hill decision was rightly quashed.  

Footnote

38.	I should record, first, that a respondent’s notice was put in to support the proposition (which had been argued and rejected below) that the appellant was legally at fault in adopting a policy – I summarise – against the use of cesspools.  This was abandoned by Miss Lang in the course of argument before us.  Secondly, as I understood her Miss Lang suggested that there were two further grounds on which the Wretton decision fell to be quashed in any event.  Of these the first arose from certain observations of the judge about the time-scale for the provision of a public sewer, at paragraphs 57 and 81 of his judgment.  The second arose from observations made by the judge at paragraphs 74 – 76 which amount to a finding, said Miss Lang (Mr Clarke disagrees), that the appellant had failed to follow its own policy.  I say nothing more about these points.  They were not the basis on which the judge quashed the Wretton decision.  They are not the subject of any respondent’s notice.  Upon any reconsideration of the Wretton case, there is nothing in this judgment in relation to these aspects which binds the parties to any particular view or approach.   

***

39.	For the reasons I have given, I would dismiss the appeal.	

Mr Justice Morland:

40.	I agree for the reasons given by my lord.

Lord Justice Thorpe:

41.	I also agree.

Order:

1.	Appeal dismissed with costs of appeal
2.	Respondents to pay costs of respondent's notice to be set off against the costs of the appeal.
3.	Leave to appeal to the House of Lords refused.

(Order not part of approved judgment)