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B2/01/2735/A
Neutral Citation Number: [2002] EWCA Civ 1487                                              
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION) 
ON APPEAL FROM READING COUNTY COURT
(HIS HONOUR JUDGE CATLIN)
Royal Courts of Justice 
Strand 
London, WC2 

Tuesday, 8th October 2002
 
B E F O R E:

LORD JUSTICE MAY 

MR JUSTICE BODEY 
 
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THAMES WATER UTILITIES LIMITED
    Appellant/Claimant 
‑v‑
 
HAMPSTEAD HOMES (LONDON) LIMITED 
Respondent/Defendant 

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(Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
     Tel No:  020 7404 1400  Fax No: 020 7831 8838  
(Official Shorthand Writers to the Court) 

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MR. J. WATSON Q.C. (instructed by the Legal Department, Thames Water Utilities Limited, Reading) appeared on behalf of the Appellant/Claimant. 
THE RESPONDENT did not appear and was not represented. 
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J U D G M E N T
1.	LORD JUSTICE MAY: This is an appeal from a decision of His Honour Judge Catlin sitting in the Reading County Court on 17th October 2001, when he gave his decision, and subsequently handed down written reasons on 23 November 2001. He dismissed the appellants' claim for £42,790.32 under section 146(2)(a)and (b) of the Water Industry Act 1991. The issue which the appeal raises is of some importance to the water industry and to building developers. The judge recognising this, gave permission to appeal. 
2.	The claimant, Thames Water Utilities Limited, is a water undertaker and sewerage undertaker appointed under section 6 of the 1991 Act. The defendants are building developers. The claimants' claim form simply states that their claim was for infrastructure charges to the value of £42,790.32. the particulars of claim stated that the claim was for the statutory fixed charges payable as a result of the connection of water and sewerage services made at the defendants' request, details of which it was said had been delivered. 
3.	A short form defence asserted that infrastructure charges can only be levied on premises that were never previously connected to a water main or to a public sewer. Boss House, it was said, was a warehouse with ancillary offices which received water and sewerage services for domestic purposes. The entire building was a single demise. The disputed charges were being levied on premises that were previously connected and therefore exempt from the statutory charging provision. Therefore the charges which the claimants sought to recover were invalid. The defence went on to make subsidiary lesser submissions, including contesting the level of infrastructure charges claimed. 
4.	The claim was heard by the judge on an agreed statement of facts, supported by the unchallenged witness statement of Robert Movell. The facts, so far as it is necessary to relate them, are as follows. The claim relates to land owned by the defendants and known as 227 to 229 Tooley Street and Boss House, Lafone Street, Southwark, London, SE1. In 1996 or 1997 the defendants converted two office blocks, one at each of these addresses, into 109 flats. The Tooley Street block originally comprised ground floor and first, second, third and fourth floors. The Boss House block was similar but with a basement floor. The defendants added one floor to the Tooley street block and two floors to Boss House. The original buildings were connected to the water mains. Each received a supply of water for domestic purposes. The Boss House building fronting on to Queen Street was connected by a 4‑inch diameter service pipe. The building fronting Tooley Street was connected by a 6‑inch diameter supply pipe. Each of the original buildings were connected to the public sewers. 
5.	On 15 September 1995 the defendants' agent wrote to the claimants making an application for the supply of service connections for each of these buildings. The application form for Tooley Street stated that the number of service pipe connections required was 59. The application form for Boss House stated that the number of service pipe connections required was 50. That in total made the 109 flats with which the appeal is concerned. The claimants, having received the application forms, provided a quotation. The quotation had three sums of money, making up a total of £52,898.88. The first two of those sums were each amounts of £23,432 for what was referred to as infrastructure charge for sewerage and water respectively. The third amount was under the heading “design estimate” and the amount quoted was £6,034.88. Although design estimate was not particularly well explained in the quotation, it was understood to be a charge for making service pipe connections for the water supply. What in fact happened was that the claimants put in two 125‑millimetre new water service pipe connections, one at each of the two premises. Those, needless to say, were mains supplies to the buildings as a whole and not in that form suppliesto the individual flats. Mr Watson tells us that there was no physical change to the main connection with the public sewer, but that what in practice happened was that each of the new 109 flats was connected internally to the existing main sewer into the public sewage system. The amount of the quotation for infrastructure charges was subsequently reduced by negotiation and became the £42,790.32 which was claimed in these proceedings. 
6.	Robert Movell explained in his witness statement the industry understanding of infrastructure charges and their purpose. He explained how in principle they are calculated and explained how they were calculated in the present case. In paragraph 34 of his witness statement he said: 
“The principle of infrastructure charges is to obtain a contribution from builders and developers to the capital investment that is required by water and sewerage undertakers to develop the public water and sewerage systems to meet the demands placed on those systems from new development.” 
7.	Section 146 of the 1991 Act has to be seen and understood in its context. The Water Industry Act 1991 has in section 1 provision for the appointment of an officer known as the Director General of Water Services who has functions to perform under the Act. Sections 2, 3, 4 and 5 are general sections making provision for general duties in respect of the water industry, for general environmental and recreational duties, for environmental duties with respect to sites of special interest, and for codes of practice with respect to environmental and recreational duties. Part 2 of the Act, which begins with section 6, concerns the appointment of relevant undertakers. Section 6(1) provides that a company may be appointed by the Secretary of State or with his authorisation by the Director to be the water undertaker or sewerage undertaker for any area of England and Wales. It was under that provision that the claimants in these proceedings were appointed. Section 6(2) provides that: 
“Without prejudice to the obligation of a company holding an appointment under this Chapter to comply with the conditions of its appointment, the appointment of a company to be the water undertaker or sewerage undertaker for any area shall have the effect, while the appointment remains in force ‑‑ of” 
8.	requiring that company to undertake certain specified obligations in relation to water and sewerage, which I need not set out in detail. It will be seen that there is reference there to the obligation of an appointed company to comply with conditions of its appointment. It will be necessary to return later to those conditions. 
	Part III is concerned with water supply. Chapter 2 is concerned with supply duties, and relevantly to this appeal section 45 contains a duty to makes connection with a water main. Subsection (1) provides as follows: 
“Subject to the following provisions of this section and to sections 46 and 47 below, it shall be the duty of a water undertaker (in accordance with section 51 below) to make a connection under this section where the owner or occupier of any premises which ‑ 
(a)consists in the whole or any part of a building; or 
(b) are premises on which any person is proposing to erect any building or part of a building,
serves a notice on the undertaker requiring it, for the purpose of providing a supply of water for domestic purposes to that building or part of a building, to connect a service pipe to those premises with one of the undertaker's water mains.”
9.	Subsection (2): 
“Where a notice has been served for the purposes of this section, the duty imposed by subsection (1) above shall be a duty, at the expense of the person serving the notice, to make the connection required by the notice if.” 
10.	There are certain conditions set out. Subsection (6) provides:
“Where a water undertaker carries out any works which it is its duty under this section to carry out at another person's expense, the undertaker shall be entitled to recover from that person an amount equal to the expenses reasonably incurred by the undertaker in carrying out the works.” 
11.	So in that section one finds a duty in appropriate circumstances upon the water undertaker to make a water connection and the power to charge for doing so. Similar, if rather more complicated provisions, appear later in the statute in relation to sewerage undertakers, in particular in sections 98, 106 and 107. It is not necessary to refer to the detail of those sections for the purpose of this judgment. 
12.	We then come to Part V of the 1991 Act. Chapter 1 is concerned with charges. Section 142(1), under the side heading “powers of undertakers to charge”, provides as follows: 
“(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 and, in the case of a sewerage undertaker, charges to be paid in connection with the carrying out of its trade effluent functions; and 
(b) to demand and recover charges fixed under this section from any persons to whom the undertaker provides services or in relation to whom it carries out trade effluent functions.” 
13.	Subsection (4) provides: 
“Except in so far as this Chapter otherwise provides, a relevant undertaker may fix charges under this section by reference to such matters, and may adopt such methods and principles for the calculation and imposition of the charges, as appear to the undertaker to be appropriate.” 
14.	Pausing there for one moment, that is evidently a subsection which gives the undertakers a fairly wide discretion as to the fixing and calculation of their charges. It is a subsection which, as will appear, is qualified by at least one subsequent section of the Chapter. It is also qualified in practice by the Office of Water Services and the Director General insisting on compliance with conditions of appointment which the undertakers have been subjected to by virtue of section 6 of the Act to which I have referred. 
15.	Section 143 makes provision for charges schemes. Section 143Aprovides for regulations as to the provisions to be included in charges schemes. Section 144 provides for liability of occupiers for charges. Section 144A provides for the right of the consumer to elect charging by reference to volume. Section 144B places restrictions on the undertakers' powers to require fixing of charges by reference to volume. Section 145 was repealed in 1999 and is not relevant to this appeal. Then we come to section 146. Subsection (1) provides:
“subject to subsection (2) below, nothing in this Chapter or in any other enactment shall entitle any relevant undertaker to fix, demand or recover an initial charge for its becoming, or for its taking steps for the purpose of becoming ‑
(a) the person who provides a supply of water for domestic purposes to any premises; or 
(b) the person who provides sewerage services for the purposes of the drainage for domestic sewerage purposes of any premises.”
16.	Subsection (2)‑ the critical subsection for the purpose of this appeal: 
“Subject to subsection (3) below, nothing in subsection (1) above or in any other enactment shall be construed as prohibiting the fixing, demand or recovery by a relevant undertaker of ‑
(a) a charge for the connection to a water supply of premises which have never at any previous time (whether before or after the coming into force of the restriction contained in this section) been connected to a supply of water provided for domestic purposes by a water undertaker or by any other authority or body which at that time provided supplies of water in the course of carrying out functions under any enactment; or 
(b) a charge for the connection to a public sewer of premises which have never at any previous time (whether before or after the coming into force of the restriction contained in this section) been connected to a sewer used for the drainage for domestic sewerage purposes of those premises by a sewerage undertaker or by any other authority or body which at that time provided sewerage services in the course of carrying out functions under any enactment.” 
17.	Speaking in generally therefore, undertakers may make charges which include (a) charges for the cost of making physical connections (section 45(6) is an example of this); (b) periodic charges for supply; (those are obvious charges with which we are all familiar), and (c) charges under section 146(2) whose ambit is the subject of these proceedings. 
18.	The judge in the present case considered a number of authorities. These included Thames Water Utilities Limited v Shepherd Bush Housing Association, an unreported decision of His Honour Judge Holden, to which I shall refer briefly later in this judgment; and a decision of Mr John Goldring QC sitting as a deputy judge of the High Court on 3rd June 1999 in Thames Water Utilities Ltd v Magdalen College Oxford. I shall refer to that case later in this judgment. The judge reckoned that the Magdalen College case was distinguishable from the present case but he considered that details of the statutory framework, regulatory background and infrastructure charges set out in Mr Goldring's judgment were correct. 
19.	Having set out the facts of the present case and referred to the principal statutory provisions, the judge made his finding in these terms: 
“I find that the buildings which contained offices were connected to water and sewage and that the existing building containing flats is connected to water and sewer. Both these buildings are within the meaning of the word 'premises' in section 146(2). Again I accept and adopt the reasons set out at page 16, paragraph 1, in the Magdalen College case. Where that case is to be distinguished on its facts to the present case, is that in my judgment the present buildings cannot be regarded as new buildings, these buildings have in my judgment previously been connected to a water supply and a sewer.” 
20.	The judge went on to find, although the relevance of this finding is not entirely clear to his judgment, that the claimants did not make the connections to the individual 109 flats. I do not think that it has been suggested that they did. In essence, the judge decided that these were not premises which came within the exception to the exception in section 146(2) of the 1991 Act because they had been previously connected to water and sewerage services. In doing so, he was plainly regarding the premises as the two buildings as a whole, the existing office buildings, and was not, as had been submitted to him on behalf of the claimant, regarding the premises as each of the individual 109 new flats. 
21.	The main ground of appeal in substance is that the judge misinterpreted the word 'premises' in section 146(2) and misapplied that section to the facts of this case. He should have regarded each of the 109 flats as premises within the subsection, those premises never previously having been connected to a supply of water or to a sewer used for domestic drainage purposes. 
22.	The respondents originally opposed the appeal. They supported the judge's judgment with a written skeleton argument prepared by counsel and a respondent's notice seeking to uphold the decision on the additional ground that the charges made were not within what was authorised in the statute anyway. This morning the court was told that the parties had in part reached a compromise. The effect of the compromise is that they have compromised the financial consequences of this judgment, both as to payment and as to costs, whatever the outcome of the appeal. In these circumstances, the respondents have not been represented before the court today. The appeal in that sense is unopposed but the claimants seek a reasoned decision reversing, as they submit, the decision of the judge on the ground that it is an important point for the claimant and for the industry as a whole. 
23.	The decision of Mr Goldring, as he was, in the Magdalen College case concerned again a claim by Thames Water Authorities in relation to buildings constructed within the grounds of Magdalen College, Oxford on land which had previously been used for squash courts and a building called the Back Lodge. Each of those buildings had been connected for domestic purposes to the claimants' water supply and public sewer. The college demolished the squash courts and the Lodge and replaced them with two halls of residence. It applied for water and sewage connections but contested the claimants' claim for infrastructure charges or, more accurately, for a charge under section 146(2) of the 1991 Act. Mr Goldring set out the statutory provisions in rather greater detail than I have. He then on page 8 of his transcribed judgment said this, under the heading 'Infrastructure charge': 
“The phrase does not appear in the Act. It does appear in a number of documents which have been drawn to my attention. Although helpful in understanding the general position, none of the documents has statutory force. If the 1991 Act does not provide for infrastructure charges, none of the documents I am about to refer to can provide a basis to claim them.” 
24.	He went on to refer to the claimants' deed of appointment under what was then the Water Act 1989. He made reference to conditions of appointment, including condition C, which has been referred to again in the context of the present appeal. Mr Goldring had a section in his judgment about the debate in the House of Lords and made references to Pepper v Hart. He did not think it necessary to take the Hansard references into account. Under the heading “The First Issue. Is Thames Water entitled to infrastructure charges?, he said this: 
“Sections 45 and 46 entitle Thames Water to claim expenses incurred in making connections. In addition, Parliament gave the water and sewerage undertaking the power, within specified circumstances, to make charges. It gave the undertaker a broad discretion in setting them.
2. Section 142(1) gives the undertaker the power to fix, demand and recover charges. Section 142(2)(A) provides that the power shall be exercised, among other things, in accordance with a charges scheme under section 143. Section 143(4) permits the undertaker to take into account the circumstances of a particular case. Section 142(4) provides the undertaker with a very wide discretion in setting those charges. Section 146 limits the circumstances in which the charges can be made. They cannot be made for taking steps to become or becoming an undertaker (section 146(1)). They can be made for connection of premises which have never previously been connected (section 146(2)). 
3. The limits set upon the undertaker in fixing the charges are specified in the provisions. Provided the undertaker acts within those limits, it can set charges and decide the factors it wishes to take into account. Although infrastructure issues are not specifically mentioned as a factor, I can see no reason at all why they should not be. The provisions do not prevent it. There is nothing surprising in a water undertaking wishing, in setting its charges, to take into account such matters as capital investment and its general capacity to provide connections.
4. Parliament intended that the consumer should be protected by the regulatory framework set out in the Act. This is to provide the balance between the undertaker's need to impose charges to enable it adequately to finance its statutory functions and the protection of the consumer. This case has demonstrated an example of the Director General acting to protect the consumer. He required undertakings to lower their charges.
5. It comes to this. Parliament conferred and must have intended to confer a wide discretion on the water undertaker in setting its charges. It intended to protect the consumer by regulation. The undertaker can take such issues as the infrastructure into account when setting those charges. Thames Water did that here. It has followed the charges scheme approved by the Director. If the charges claimed are in accordance with section 146(2) of the 1991 Act, they are recoverable.” 
25.	He went on to deal with the second issue which was whether the infrastructure charges sought in that case were recoverable. He set out briefly the opposing cases of the parties. The Thames Water's case was that the construction of the word 'premises' is perfectly simple. It is a matter of common sense. It is to be construed having regard to the context in which it is found. Here, it was submitted that the new buildings were plainly premises which have never been connected to a water supply or sewer. They could not have been. They were not built. The College's case included that “premises” within the 1991 Act meant more than buildings. It meant the premises shown and described in the rating list; that is to say, the university college and premises. There was no subdivision of that. The word 'premises' is capable of meaning a building or part of a building when the Act specifically so provides. Otherwise it should be given its natural meaning. On the basis of that definition these premises, it was submitted, had previously been connected. 
26.	Mr Goldring considered those submissions in some detail and in conclusion he rejected the case on behalf of the College. He said this at page 16: 
“The meaning of 'premises' in section 146(2) is on its face and in its context quite straightforward. It is being used, not in a technical sense, but a natural and ordinary way. It relates to buildings in the way Miss Baxendale submits.
2. The halls of residence are new buildings. By definition, they are premises which have never previously been connected to a water supply or a sewer.
3. What Parliament intended is clear. It was to permit the undertaker to charge in respect of buildings never previously connected.” 
27.	It was the first two sentences at least of that brief conclusion to which Judge Catlin referred in the present case in support of his conclusion that in the present case the buildings were premises which had previously been connected to the water and the sewerage services. 
28.	The decision to which the judge in the present case also referred of United Utilities Water PLC v Albany Homes Limited was a decision in the West London County Court by His Honour Judge Cowell given on 9th November 2001. Its facts bear some similarities to those in the present case. The judge introduced his judgment in these terms: 
“United Utilities Water plc, a water and sewerage undertaker for the North West, claims in this action an 'infrastructure charge' of £23,072.16 from the defendant, Albany Homes Ltd, which in about 1998 purchased property in Cobourg Street, Manchester, known as Stonebridge House. It was an old textile mill or warehouse; but, whichever it was, the water supplied to it was not used in any manufacturing process, but was used for domestic purposes within the meaning of the legislation I shall mention.” 
29.	The judge went on to recount that the building was gutted inside and some of the peripheral walls remained. The building as it now was after the development was a block of 42 flats which contained 30 per cent more floor space than the original building. The defendant had made an application for water supply, asking for a new supply for 42 flats with a preferred size of connection of 110 millimetres. During the works pipe works, soil pipes and gutters were removed from the original building and then a water pipe was put through the wall into the pavement. The claimants, the water undertaking, made the connection and installed a meter inside the building to serve the whole building and approved all of that by its inspector. Nothing was done outside the building to connect into the sewerage system. The new system installed inside the building was connected to the old system at some point inside. On those facts a former textile mill or warehouse, having water and sewerage services for domestic purposes, was converted into 42 flats and a new water supply main was installed to connect to the building. The judge referred to the Magdalen College case. He found Mr Goldring's judgment very helpful. He said that he was bound to follow it. But if he was not bound to do so, he had no reason to disagree with it. He observed that section 146(2) does not refer to a building but to premises never at any previous time connected. He said that the use of the word 'premises' in sections 41 and 45 showed that 'premises' may in the context of the Act consist of a part of a building. He then said in the latter part of paragraph 10 of his judgment: 
“Therefore even if the word might in some contexts have a wider meaning I do not think the word in section 146(2) should have a different meaning from that in sections 41 and 45. It seems to me therefore that each one of the flats, being a part of a building, is something, properly to be described as 'premises', never at any previous time connected. Each flat, the premises, was simply not there in 1998 and before. The purpose of the development was to create 42 of them so that each could be separately sold or let as individual premises, and not to sell or let identifiable parts of the old mill building as it used to stand with its floor and rooms before it was gutted. I am therefore satisfied that the claimant has established that the 42 flats are each premises never at any previous time connected.” 
30.	He then said of the Magdalen College case that it seemed to him that it was sufficient for the purpose of deciding that case for the judge to have stated that Parliament intended to permit the undertaker to charge in respect of buildings never previously connected. 
31.	Judge Cowell was referred to Judge Catlin's decision in the present case. He referred to written submissions before him made by the defendants that premises must be equated with buildings. He did not accept that submission. He said: 
“Premises in the sections of the Act I have referred to cannot exist without a building, but are not in my judgment to be equated with buildings.” 
32.	He went on in paragraph 14 of his judgment: 
“It seems to me therefore that the existence of the same building is not conclusive of the question whether the premises are new so as never previously to have been connected. For example, if the building is not demolished and the existing floors are simply let out separately as self contained units it would probably not be correct to regard any one floor as premises never at any previous time connected. The more each floor was altered in layout or design or in its capacity to use the water and sewerage systems the more readily could it be said that new premises had been created which had never at any previous time been connected.” 
33.	The one other previous decision to which I shall refer is a decision of Judge Holden sitting in the Brentford County Court on 5th November 1996 in Thames Water Utilities Limited v Shepherd Bush Housing Association. It is not necessary to recount the facts of that case. Suffice it to refer to a single paragraph in the judge's judgment at the foot of page 4 of the faxed copy that we have. He said this: 
“Section 146(2)(b) inter alia allows under section 2 an undertaking to make a connection charge ie a charge 'for' the connection to a public sewer of premises which have never at any previous time been connected to a sewer for the drainage of domestic sewerage purposes. A connection charge arises notwithstanding the fact that connection might be made by the developers and not the defendants. It is the acceptance of that sewerage into the undertaking system which is material. In my judgment a connection of the services is in itself the provision of services. I do not see that it matters if such a service is described as being an 'infrastructure charge'. Such an expression is not used in the primary legislation.” 
34.	I say straightaway that in my judgment Mr Goldring's analysis of the structure of the Act, so far as relevant for present purposes, was correct. I agree with the analysis undertaken by Judge Cowell and with his application of it to the facts of his case. I agree with the paragraph from Judge Holden's judgment that I have just read. 
35.	Mr Watson on behalf of the claimants submits that Judge Catlin in the present case misinterpreted section 146(2). He submits that he appears to have read the passage in Mr. Goldring's judgment out of context as defining the word 'premises' as synonymous with and limited to buildings. He submits that the statute uses the word 'premises' in a flexible way in various places, thus illustrating that its meaning has to be derived from its particular context. The meaning may not be inflexibly the same every time that it is used. He submits that Judge Cowell was correct and that the judge in the present case was not. 
36.	I take into account the written submissions lodged on behalf of the respondents to this appeal in support of the judge's judgment but it is not necessary, I think, to refer to them in detail. In my judgment, the interpretation of section 146(2) has to be considered not only by reference to the word 'premises' but also by reference to the use there of the word 'connection'. 'Premises' is an ordinary word whose precise meaning is to be derived from its context. It is to be noted that neither 'premises' nor 'connection' or 'connected' are defined in the definition section of this Act, section 219. 'Premises', it seem to me, will usually include buildings but may not be limited to buildings and might in some circumstances refer to a place with few or no buildings on it. Premises may in its context also consist of a part of a larger building. A garden centre or a builder's merchant may have premises which include one or more buildings but the premises may extend to the larger site used for the keeping of plants or bricks and sand. A garden centre might conceivably have premises with no buildings on it at all. The premises of a farming business might consist of a group of farm buildings but it would be a somewhat strange context perhaps, though not impossible, which included one hundred acres of fields as part of the farm premises. The premises of a large corporation might in context consist of the entirety of a large office block. The premises of a small firm or company might consist of one or two rooms on an upper floor of a much larger building. In the general context of the supply of water and sewerage services premises are likely to include buildings or parts of buildings to which the water is supplied and from which the sewage is taken away. There are a number of references to premises in various other sections of this statute. Those include, but are not perhaps limited to, sections 41, 45, 52 and 64. These show that in this statute the expression 'premises' is used in various contexts with various contextual shades of meaning. 
37.	In my judgment, as I have said, the relevant meaning of section 146(2)(a) and (b) is to be derived not only from the use of the word 'premises' but from its use in the context of the word 'connection'. The full relevant expression is “a charge for the connection to a water supply of premises which have never at any previous time been connected to a supply of water provided for domestic purposes by a water undertaker.” I think that the heading of section 146 may be misleading. At first blush, it appears to refer to the making of a physical connection so that the charge would be a charge for doing so. But the undertaker does not have to go to section 146(2)to be able to charge the costs of the physical connection. Section 45(6) provides the power to make such charge for water and sections 106 and 107 do so also for sewerage. Section 146(2) is concerned, I think, with the connection to the water and sewerage systems of premises which have not previously been so connected and must include new premises which are likely to place an additional burden on the system as a whole. If the premises are in this sense new premises, there is I think no need to establish positively that there will be a volumetric additional burden. It may be taken that in the round there will be. The section applies to a new housing development on what was formerly an unoccupied site. It would probably not apply to a modest alteration to an existing house which did not constitute the building of new premises. Where existing buildings are converted, it will be a question of fact and degree whether the result is or includes the construction and connection of premises which have never previously been connected, or whether the conversion retains the identity of premises which existed and were connected before the conversion took place. Judge Cowell gave an example of such in his decision to which I have referred. 
38.	On the facts of the present case the 109 flats were new premises which had never previously been connected and the claimants were entitled to make a charge for each of them under section 146(2). Although the expression 'infrastructure charge' does not appear in the statute, I am satisfied that the charge to which section 146(2) refers is in the nature of a contribution to the capital and maintenance cost of providing services, subject to the additional demand which the connection of premises not previously connected must in general generate. I reach this conclusion without reference to Hansard or to condition C of the claimants' conditions of appointment. Mr Watson did not persuade me that condition C was properly available as an aid to construing section 146(2) but it is not necessary for me to decide. 
39.	For these reasons I would allow the appeal and invite Mr Watson to address us as to the form of any order that should be made. 
40.	MR JUSTICE BODEY: I agree with the judgment just delivered. There is nothing which I can usefully add. 

Order: Appeal allowed; order of county court set aside and varied so that there be judgment for the claimant; no order for costs in relation to the trial below; no order as to costs of the appeal.

SMITH BERNAL