Manchester Ship Canal Co Ltd v United Utilities Water plc (No 1)

The Supreme Court considered whether the Water Industry Act 1991 implied a statutory right for sewerage undertakers to discharge surface water and treated effluent into private watercourses without the consent of the owners. The court reaffirmed the narrow test for implying a statutory authorisation of what would otherwise be a tort: implication requires necessity, not mere convenience. It rejected the submission that section 159 of the 1991 Act (power to lay pipes across land) implied a general right to create new outfalls onto private watercourses, approving the Court of Appeal’s reasoning in British Waterways Board v Severn Trent Water Ltd on that point.

However, the court held that the Act must be read so as to permit sewerage undertakers to continue to use outfalls that were already in use on or before 1 December 1991. That limited implication was necessary to avoid a statutory and practical inconsistency: the duties and protections in the 1991 Act (in particular section 116, read with sections 94, 106 and 117) require continued operation of existing sewers and prohibit immediate cessation of existing outfalls. The surviving right to discharge from pre-existing outfalls is subject to the statutory restrictions in section 117(5) (prohibiting discharge of foul water without adequate treatment) and to compensation and other protections in the Act (including Schedule 12 paragraph 4 and section 186(3)).

Background and parties. The dispute concerned whether a privatised sewerage undertaker (United Utilities) had a statutory right under the Water Industry Act 1991 to discharge surface water and treated effluent into private watercourses owned by the Manchester Ship Canal Company and others without the owners’ consent. The issue arose on appeal from the Court of Appeal ([2013] EWCA Civ 40).

Nature of the claim and relief sought. The undertaker sought a declaration of a statutory right to discharge into private watercourses. The canal owners contended that discharge into their canals without consent would be trespass unless an express statutory right existed; they denied any such right was conferred by the 1991 Act.

Procedural posture. The case reached the Supreme Court on appeal from the Court of Appeal, which had rejected a broad implication of a general right to create new outfalls but had not been asked to decide the legal effect of outfalls already in use before consolidation.

Issues framed by the court.

• whether the 1991 Act implies a general right for sewerage undertakers to discharge into private watercourses (i.e. in relation to present and future outfalls);
• if not, whether a right survived in relation to outfalls already in use before the coming into force of the 1991 Act (1 December 1991); and
• how the duties and compensation regime in the 1991 Act (notably sections 94, 106, 116, 117 and Schedule 12) affected the implication analysis.

Court’s reasoning and conclusion. The court traced the legislative history from the Public Health Acts through the Water Act 1989 to the consolidation in the Water Industry Act 1991. It applied the established test for implying statutory powers to authorise otherwise tortious acts, requiring necessity. The court concluded that:

• there is no basis to imply a general right to create new outfalls from section 159 or other provisions of the 1991 Act; that argument was inconsistent with the Act’s scheme and the protection in section 117 against foul discharges; and the Court of Appeal’s rejection of that argument in British Waterways Board v Severn Trent Water Ltd was not to be displaced;
• but the 1991 Act, when read as a coherent scheme, implicitly authorised the continued use of sewer outfalls that were in existence and in use on or before 1 December 1991. This implication arises primarily from section 116 (prohibiting discontinuance of existing public sewers unless an alternative is provided), read against the undertaker’s duties (section 94) and rights to connect (section 106), and in the context of the practical impossibility of instantaneously replacing or compulsorily acquiring all necessary rights on transfer or consolidation;
• that limited implication is subject to section 117(5) and (6) (so foul water may not be discharged without appropriate treatment and functions must be exercised without creating a nuisance) and to the compensation provisions and other protections in the 1991 Act (including Schedule 12 paragraph 4 and section 186(3)); and
• the court therefore allowed the appeal in part, declaring that sewerage undertakers are entitled to discharge into private watercourses from outfalls in use on or before 1 December 1991, subject to the statutory qualifications and without prejudice to any private agreements between the parties.

Wider context. The court emphasised the restrictive approach to implying statutory authority to commit torts, the significance of the consolidation character of the 1991 Act, and the practical and legal incoherence that would follow if existing outfalls had been deprived of legal protection without clear parliamentary direction.

Appeal allowed in part. The Supreme Court rejected a general implication from section 159 that sewerage undertakers may create new outfalls discharging into private watercourses without owner consent, but held that the 1991 Act implicitly permits the continued use of outfalls that were in use on or before 1 December 1991. That limited implication was necessary to avoid incompatibility between the statutory duties to operate and not discontinue existing public sewers (section 116, read with sections 94 and 106) and the law of tort; the right to continue existing discharges is subject to the statutory qualifications in section 117 (prohibiting untreated foul water and requiring no nuisance) and to compensation and other statutory protections (including Schedule 12 paragraph 4).

On appeal from the Court of Appeal (Civil Division), judgment below: [2013] EWCA Civ 40.