Allen v Gulf Oil Refining Ltd

Where Parliament expressly or by necessary implication authorises the construction and operation of an undertaking, the authority carries immunity from liability in nuisance for consequences which are inevitably incidental to the authorised activity. The undertaker must exercise reasonable care and bears the burden of proving inevitability.

General statutory language may suffice. Detailed specifications, express words authorising operation and compensation provisions are not indispensable where the Act as a whole shows that Parliament intended the undertaking to operate. The immunity extends only to the minimum nuisance inevitably caused by an undertaking within Parliament’s contemplation. Any additional nuisance remains actionable.

The respondent alleged that smell, noise and vibration from an oil refinery adjoining her village constituted a common law nuisance. Those allegations had not been tried and were assumed to be true solely for a preliminary issue. Fifty-two similar actions had been stayed pending its determination.

Kerr J formulated the preliminary question whether the company could rely on the Gulf Oil Refining Act 1965 as authorising construction and operation of the refinery. May J decided the issue in the company’s favour. On 27 June 1979, the Court of Appeal, consisting of Lord Denning MR and Cumming-Bruce LJ, reversed that decision.

The company appealed. The central issue was whether the Act conferred, expressly or by necessary implication, statutory authority which protected the company from liability for nuisance inevitably resulting from the careful construction and operation of a refinery on the specified site.

1. Appeal allowed by a majority of four to one. Lord Wilberforce delivered the leading speech. Lord Diplock and Lord Roskill expressly agreed with him, and Lord Edmund-Davies reached the same conclusion. The Court of Appeal’s order was set aside, subject to the specified costs provisions. The House declared that the company could rely on the Gulf Oil Refining Act 1965 as a defence to nuisance proceedings only so far as the nuisance was shown to be the inevitable result of erecting and operating a refinery. The cause was remitted to the Queen’s Bench Division.

2. Per Lord Wilberforce, Parliament’s express or necessarily implied authorisation of the construction and use of an undertaking carries immunity from an action in nuisance for the inevitable consequences of the authorised activity. The immunity remains conditional upon the undertaking being constructed and operated with reasonable care and regard for neighbouring interests. A merely permissive statutory power must instead be exercised consistently with private rights.

3. Per Lord Wilberforce, the Act, construed as a whole, necessarily authorised both construction and operation of a refinery on the land which the company was empowered to acquire compulsorily. The statutory purpose, the preamble, the specified site and the associated jetties and railway demonstrated Parliament’s intention that an operating refinery of the contemplated scale should exist. The absence of detailed specifications for the refinery, or of express words authorising its use, did not negate that intention. Manchester Corporation v Farnworth [1930] A.C. 171 was applied.

4. The immunity was limited. The company had to prove that it was impossible to construct and operate any refinery within Parliament’s contemplation on the site without causing at least the nuisance alleged, however carefully the undertaking was designed and operated. The authority was not confined to the refinery actually built, nor did it protect nuisance exceeding the irreducible consequences of an authorised refinery. Any excess remained actionable.

5. Per Lord Wilberforce, Parliament must also be taken to have authorised the alteration from peaceful countryside to an industrial environment and the corresponding change in the standard of amenity relevant to nuisance. Lord Edmund-Davies added that the absence of compensation provisions was an important indication against interference with private rights, but was not conclusive.

6. Lord Keith of Kinkel dissented. Applying strict construction against the promoters of a private Act, he considered that compulsory acquisition of land for constructing a refinery did not necessarily imply authority to operate it in derogation of neighbouring rights. In his view, the omission of express authority to work or use the refinery meant that the statutory-authority defence was unavailable.

• House of Lords: By a majority of four to one, allowed the company’s appeal in Allen v Gulf Oil Refining Ltd [1981] AC 1001. The Court of Appeal’s order was set aside subject to specified costs provisions. A qualified declaration of statutory authority was granted and the cause was remitted to the Queen’s Bench Division.
• Court of Appeal: On 27 June 1979, Lord Denning MR and Cumming-Bruce LJ allowed the claimant’s appeal, reversed May J and answered the preliminary question against the company.
• High Court, Queen’s Bench Division: May J decided the preliminary issue in the company’s favour. The question had been formulated by Kerr J in an order dated 23 May 1977.