Cambridge Water Co v Eastern Counties Leather plc

Liability in damages under the rule in Rylands v Fletcher requires reasonable foreseeability of damage of the relevant type. The rule remains strict because liability may arise despite the exercise of reasonable care, but it operates as an extension of nuisance to escapes from land rather than as a general doctrine governing ultra-hazardous activities.

The substantial storage and industrial use of chemicals is a non-natural use of land. Nevertheless, liability does not arise where the relevant damage was unforeseeable when the defendant brought, retained or used the substance on its land. Later knowledge does not impose strict liability after the substance has passed irretrievably beyond the defendant’s control.

The appellant leather manufacturer used perchloroethene for degreasing pelts. Small quantities were regularly spilled before 1976. The solvent penetrated the ground, accumulated in a chalk aquifer and travelled to the respondent water company’s borehole. Its presence rendered the water unsuitable for lawful public supply under subsequently applicable regulatory standards.

Kennedy J dismissed claims in negligence, nuisance and under the rule in Rylands v Fletcher. The Court of Appeal allowed the water company’s appeal under that rule, treating Ballard v Tomlinson as imposing strict liability for contamination of percolating water. The manufacturer appealed. The central questions were whether foreseeability of the relevant type of damage was required and whether the industrial use and storage of the solvent was a natural use of land.

1. Appeal allowed unanimously. Lord Goff of Chieveley delivered the leading speech. Lord Templeman, Lord Jauncey of Tullichettle, Lord Lowry and Lord Woolf agreed. The Court of Appeal’s order was set aside and Kennedy J’s order dismissing the claim was restored.

2. Per Lord Goff, reasonable foreseeability of damage of the relevant type is a prerequisite to recovering damages under the rule in Rylands v Fletcher. Blackburn J’s formulation concerned things likely to cause mischief if they escaped, known to be mischievous and capable of producing natural and anticipated consequences. The rule is strict because the defendant may be liable despite exercising all reasonable care, not because unforeseeable types of damage are recoverable.

3. The historical relationship between nuisance and Rylands v Fletcher supported the same conclusion. Foreseeability is required for damages in private nuisance following The Wagon Mound (No 2). The Rylands v Fletcher rule should coherently be treated as an extension of nuisance to escapes from land, including isolated escapes. It should not be developed judicially into a general system of strict liability for ultra-hazardous activities. Such wider liability is more appropriately defined by Parliament.

4. Ballard v Tomlinson did not establish liability for unforeseeable damage. It established only that contamination of water available beneath neighbouring land could found liability under nuisance or Rylands v Fletcher. The defendant’s foresight was not in issue there. The Court of Appeal therefore erred in treating that authority as independently imposing absolute liability.

5. The relevant damage was not reasonably foreseeable when the solvent was brought onto, retained or used on the manufacturer’s land. Subsequent knowledge of its harmful characteristics did not create liability for the continuing escape. By then the solvent had travelled through the aquifer and passed irretrievably beyond the manufacturer’s control.

6. Lord Goff rejected the judge’s alternative conclusion that the use was natural. Storing substantial quantities of chemicals on industrial premises was an almost classic example of non-natural use. Common use within an industry, or the creation of local employment, did not bring it within the ordinary-use exception. That conclusion could not, however, overcome the absence of foreseeable damage.

1. House of Lords: The manufacturer’s appeal was allowed unanimously. The Court of Appeal’s order was set aside and Kennedy J’s order restored. The cause was remitted to the Queen’s Bench Division to act consistently with the judgment.

2. Court of Appeal: The water company’s appeal was allowed under the rule in Rylands v Fletcher. The court imposed strict liability on the authority of Ballard v Tomlinson and awarded £1,064,886 in damages with interest.

3. High Court, Queen’s Bench Division: Kennedy J dismissed the claims in negligence, nuisance and under the rule in Rylands v Fletcher.