The Manchester Ship Canal Company Ltd v United Utilities Water Plc

A transfer scheme under the Water Act 1989 could transfer statutory rights to discharge through existing outfalls, even though the rights originated in implied powers under earlier public-health legislation. The broad language of the scheme was sufficient to include such rights. The consolidating water legislation of 1991 did not retrospectively remove rights transferred in 1989. The absence of an implied power to discharge from new sewers under British Waterways Board v Severn Trent Water Ltd [2002] Ch 25 did not determine the position concerning pre-1989 outfalls.

The Canal Companies sought declarations and damages against United Utilities in respect of discharges into the Manchester Ship Canal and Bridgewater Canal. United Utilities applied for summary judgment concerning outfalls constructed before 1 September 1989, contending that rights previously enjoyed by the relevant water authority had passed to it under the transfer scheme made pursuant to the Water Act 1989.

The Canal Companies argued that the power arose only from provisions continuing under the 1989 legislation and had been removed by the 1991 water legislation. The central issue was whether United Utilities retained rights to discharge through pre-1989 outfalls.

1. The applications were suitable for determination under CPR Part 24. The parties had had an adequate opportunity to address the legal issue and there was no evidential deficiency. The court therefore adopted the approach in ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 and decided the short point of law.

2. Before 1989, the statutory scheme governing sewerage and drainage conferred an implied power to discharge water. Durrant v Branksome UDC [1897] 2 Ch 291 demonstrated that the power could properly be described as a right. Comparable statutory entitlements had likewise been treated as rights in In re Corporation of Dudley (1881-1882) LR 8 QBD 86, Abingdon Corporation v James [1940] Ch 287 and Newcastle-under-Lyme Corporation v Wolstanton Ltd [1947] Ch 427.

3. The transfer scheme and paragraph 2(3) of Schedule 2 to the Water Act 1989 were deliberately broad. They included rights under enactments and rights which might otherwise have been incapable of transfer. The specific rights to discharge from existing outfalls therefore passed to United Utilities. They were transferred in their existing form and were not enlarged.

4. The 1991 legislation was intended principally to consolidate the water legislation and did not clearly indicate an intention to derogate from completed transfer schemes. The deeming provisions relied on by the Canal Companies could not transform pre-existing pipes, with their accrued rights of discharge, into pipes laid only under section 159 of the Water Industry Act 1991.

5. British Waterways Board v Severn Trent Water Ltd [2002] Ch 25 established that the 1991 Act did not imply a power to discharge from new sewers. It did not decide the transfer-scheme argument advanced in the present cases and was distinguishable because the defendant there relied on a terminable licence and section 159. The court provisionally considered that any pre-1991 right derived from that licence might not survive termination.

6. United Utilities retained its rights of discharge through outfalls dating from before 1 September 1989. The claim concerning 106 Manchester Ship Canal outfalls laid by 31 August 1989 was, subject to further submissions on the licence point, suitable for dismissal. All consequential matters, including any application for permission to appeal, were adjourned to the forthcoming case management conference.