Supreme Court judges have ruled unanimously against United Utilities in an appeal case about sewge discharges brought by Manchester Ship Canal Company.

The Supreme Court has this morning issued its final judgement in an appeal which forms part of long-running litigation about discharges of foul water contaminated with untreated sewage into the Manchester Ship Canal.

The Supreme Court had been asked to decide whether the owner of the beds and banks of the canal, the Manchester Ship Canal Company Ltd, can bring a claim in nuisance or trespass when the canal is polluted by discharges of foul water from outfalls maintained by the statutory sewerage undertaker, United Utilities Water Ltd.

The Canal Company had threatened to bring a claim against United Utilities for trespass and nuisance. In response, United Utilities asked the High Court to make a declaration that the Canal Company had no right of action. The court was not asked to decide whether the Canal Company’s claim would be successful on the relevant facts. The question was whether the claim would be inconsistent with and therefore barred by the statutory scheme for regulating sewerage established by the Water Industry Act 1991.

The High Court judge agreed to make the declaration requested by United Utilities - his decision was then upheld by the Court of Appeal. The Canal Company then appealed to the Supreme Court.

The implication of the initial two judgments was that no owner of a canal (or other watercourse or body of water) can bring a claim based on nuisance or trespass against a sewerage undertaker in respect of polluting discharges into the water, unless the sewerage undertaker is guilty of negligence or deliberate wrongdoing.

A claim of this kind would be prevented even if the polluting discharges were frequent and had significant and damaging effects on the owner’s commercial or other interests, or on its ability to enjoy its property.

United Utilities’sewerage network includes around 100 outfalls from which material emanating from sewers, sewage treatment works and pumping stations is discharged into the canal. When it is operating within its hydraulic capacity, the discharges are of surface water or treated effluent, but when the system’s hydraulic capacity is exceeded at least some of the outfalls discharge foul water into the canal.

There is no suggestion that the polluting discharges are caused by negligence or deliberate wrongdoing on the part of United Utilities. However, they could be avoided if United Utilities invested in improved infrastructure and treatment processes.

Supreme Court judgement unanimously allows Canal Company’s appeal

The Supreme Court judgement unanimously allows the Canal Company’s appeal. It holds that the 1991 Act does not prevent the Canal Company from bringing a claim in nuisance or trespass when the canal is polluted by discharges of foul water from United Utilities’ outfalls, even if there has been no negligence or deliberate misconduct.

Reasons for the Judgment

The starting point is that the owner of a canal or other watercourse has a property right in the watercourse, including a right to preserve the quality of the water, which is protected by the common law. The discharge of polluting effluent into a privately-owned watercourse is an actionable nuisance at common law if the pollution interferes with the owner’s use or enjoyment of its property.

The Supreme Court was asked to decide in this case whether the 1991 Act excludes common law rights of action in nuisance and trespass.

The Supreme Court says that any body which exercises statutory powers, such as a sewerage undertaker, is liable in the same way as any other person if it is responsible for a nuisance, trespass or other tort, unless either it is:

(i) acting within its statutory powers, or (ii) has been granted some statutory immunity from suit.

The 1991 Act does not expressly authorise United Utilities to cause a nuisance or to trespass by discharging foul water through the outfalls into the canal.

While United Utilities’ entitlement to use the outfalls derives from section 116 of the 1991 Act, this is subject to a number of statutory protections for watercourses.

Section 117(5) provides that nothing in section 116 (or the other relevant sewerage provisions of the 1991 Act) authorises a sewerage undertaker to use a sewer, drain or outfall to convey foul water into a watercourse. Sewerage undertakers therefore do not have statutory authority to discharge untreated sewage into watercourses.

Section 117(6) also prevents a sewerage undertaker from carrying out its functions under the relevant sewerage provisions so as to create a nuisance. Section 94(4) makes it clear that the common law remedies for nuisance – such as an injunction or damages – are available in addition to any remedy available by virtue of section 94.

Section 186(3) further protects the owners of watercourses, and other rights-holders, by stating that nothing in the relevant sewerage provisions authorises a sewerage undertaker to damage a watercourse, or the quality of the water in it, without consent

According to the Supreme Court, the polluting discharges similarly cannot be regarded as having been impliedly authorised by Parliament, since they are not an inevitable consequence of a sewerage undertaker’s performance of its statutory powers and duties. In the present case, the discharges could be avoided if United Utilities invested in improved infrastructure and treatment processes

United Utilities had argued that the Canal Company has no cause of action because the only way to avoid the discharges of foul water into the canal would be to construct new sewerage infrastructure.The water company’s case relies on the House of Lords’ decision in Marcic v Thames Water Utilities Ltd [2003] UKHL 66 which it says established that Parliament’s intention was that the construction of new sewerage infrastructure should be a matter for the Secretary of State or the regulator Ofwat –and not the courts.

The Supreme Court has rejected this argument, ruling that there are a number of indications that Parliament did not intend the 1991 Act to exclude a claimant’s right to enforce its private property right in a watercourse. The ruling makes specific reference to the following sections of the Water Act 1991:

• First, section 186(7) provides for arbitration where water quality has been damaged without consent, at the option of the party complaining. This strongly suggests that the complainant could alternatively choose to pursue a common law claim.
• Secondly, section 180 of the 1991 Act gives effect to Schedule 12, which makes provision for statutory compensation. Compensation is available for damage caused by the authorised acts of sewerage undertakers, but not for damage caused by acts which are unauthorised, such as the discharges of foul water into the canal. This indicates that the victims of unauthorised damage retain their common law rights of action. Otherwise, they would be left without any remedy for the damage they have suffered, which would be anomalous. They would also be treated less favourably than the victims of authorised damage, which would be perverse.

The Supreme Court has also ruled that depriving the victims of a nuisance or trespass of their common law rights of action would be a substantial change to the law as it stood before the 1991 Act was enacted, saying it is unlikely that a change of this kind would have been made in a consolidation statute. Moreover, since the 1991 Act is detailed and elaborate, it would be surprising if Parliament had left an important change in the law to be implied rather than stated expressly.

In addition, the principle of legality holds that fundamental common law rights, such as a right of action to protect private property, are not to be taken to be overridden in the absence of express language or necessary implication

United Utilities had relied on section 18, which empowers the Secretary of State and Ofwat to make enforcement orders for the purpose of securing compliance by sewerage undertakers with statutory and certain other requirements. These include the general duty in section 94, which requires sewerage undertakers to provide a sewerage system. Section 18(8) makes it clear that it is not possible to enforce these statutory and other requirements by bringing a claim at common law; an order under section 18 provides the only available remedy.

However, the Supreme Court says this only applies to causes of action that are based on a breach of a statutory or other requirement that is enforceable under section 18. If a sewerage undertaker does something (or fails to do something) which gives rise to an independent common law cause of action, for example, for nuisance or trespass, the 1991 Act does not prevent the courts from enforcing the claimant’s common law rights and awarding any available common law remedies.

The Supreme Court accepts that the regulatory scheme established by the 1991 Act, including the making of enforcement orders under section 18, might be disrupted if the court were to grant injunctions which required a sewerage undertaker to spend large sums on new infrastructure as a remedy for interferences with private property rights.

That might be so if such an injunction conflicted with the arrangements in the Act for the regulatory approval of capital expenditure and the charges imposed on the sewerage undertaker’s customers.

However, this does not mean that common law rights of action are excluded in such a case. Instead, the courts may make an award in damages, both for past invasions of property rights and for future or repeated invasions of those rights. This would vindicate property rights in relation to watercourses until the sewerage undertaker is in a position, with Ofwat’s approval, to invest in a long-term solution.

The Supreme Court’s conclusion is that the 1991 Act does not prevent the Canal Company from bringing a claim in nuisance or trespass when the canal is polluted by discharges of foul water from United Utilities’ outfalls.

Click here to download the full judgment of the Court – which is the only authoritative document.