The Manchester Ship Canal Company Ltd v United Utilities Water Ltd (No 2)

The Supreme Court held that the Water Industry Act 1991 does not, either expressly or by necessary implication, deprive owners of watercourses of common law causes of action in private nuisance or trespass where sewerage undertakers discharge polluting effluent into those watercourses. Key statutory provisions considered include sections 18, 94(1), 116, 117(5) and (6), 186(3) and (7) and paragraph 4 of Schedule 12. The court reiterated the established tests: (i) a nuisance or trespass is actionable at common law unless positively authorised by statute, and (ii) statutory authorisation of what would otherwise be a tort requires clear language or necessary implication (the inevitability test from Allen v Gulf Oil and Manchester Corpn v Farnworth).

Applying those principles, the court concluded that sections 117(5) and 186(3) demonstrate that Parliament did not authorise discharges of untreated foul water into private watercourses and, indeed, contemplated the survival of common law remedies (including arbitration at the option of the complainant). Section 18(8) preserves common law remedies except where contravention of a statutory requirement is an essential ingredient of the cause of action (the position in Marcic). The Canal Company’s claims for nuisance/trespass in respect of polluting discharges are therefore not excluded, and the appeal was allowed.

Background and parties. The Manchester Ship Canal Company Ltd (the Canal Company) owns the beds and banks of the Manchester Ship Canal. United Utilities Water Ltd (United Utilities) is the appointed sewerage undertaker for the North West of England. United Utilities operates an extensive sewerage network with outfalls discharging into the canal; at times of hydraulic overload some discharges are foul. The Canal Company sought a declaration that it retained common law causes of action in nuisance and trespass for polluting discharges and that United Utilities required consent or a licence to discharge foul water into the canal.

Procedural history. The judge at first instance (Fancourt J) granted a declaration that, absent negligence or deliberate wrongdoing, the Canal Company could not bring nuisance or trespass claims where the discharge contravened sections 117(5) and/or 186(3) of the Water Industry Act 1991, relying on Marcic. The Court of Appeal ([2022] EWCA Civ 852) upheld that conclusion. The Canal Company appealed to the Supreme Court.

Nature of the application / relief sought. The Canal Company sought a declaration that common law claims in nuisance and trespass remain available against sewerage undertakers for polluting discharges into privately owned watercourses; United Utilities sought a declaration to the contrary.

Issues framed. (i) Whether the 1991 Act, construed as a whole, excludes private law actions in nuisance or trespass in respect of polluting discharges from sewerage undertakers, absent negligence or deliberate wrongdoing; (ii) if not, whether Marcic requires a different outcome; and (iii) the effect of statutory protections (eg sections 117(5), 117(6), 186(3), Schedule 12 para 4) and the statutory enforcement regime (section 18) on common law remedies and the appropriate judicial remedy.

Reasoning and holdings on the issues. The court analysed (a) long-standing private nuisance principles (including continuing nuisance and the Sedleigh-Denfield line), (b) the historical statutory background governing sewerage authorities, and (c) the 1991 Act as a consolidation statute. The panel emphasised the principle of legality: fundamental property rights and access to the courts are not to be abrogated by ambiguous statutory language. The 1991 Act expressly: (i) prohibits use of sewers/outfalls to convey foul water into watercourses without adequate treatment (section 117(5)), (ii) requires sewerage undertakers to avoid creating a nuisance when exercising certain functions (section 117(6)), (iii) preserves the need for consent and provides optional arbitration where injurious affection is alleged (section 186(3) and (7)), and (iv) provides statutory compensation only where acts are authorised (Schedule 12 para 4). Those provisions indicate Parliament did not intend to authorise polluting discharges or to oust common law remedies. Section 18(8) is a qualified ouster: it preserves common law remedies unless the contravention of the statutory duty is an essential ingredient of the cause of action (the Marcic situation where relief would require the court to order construction of new public sewers). The court distinguished Marcic: in Marcic the cause of action necessarily depended on a duty to construct new sewers enforceable only under the statutory regime; that reasoning does not extend to cases where the undertaker causes or adopts a nuisance by operating infrastructure so as to discharge polluting effluent into a private watercourse. The Supreme Court allowed the Canal Company’s appeal and held that common law actions in nuisance or trespass are not generally barred in these circumstances, subject to the court’s discretion as to remedy (including the appropriateness of injunctions versus damages given the statutory regulatory context).

Wider implications. The court affirmed that, while the statutory regulatory regime and public interest considerations are relevant to the choice of remedy (eg suspension of injunctions, damages in lieu), they do not justify wholesale displacement of common law rights where Parliament has not authorised the nuisance or provided compensation.

Appeal allowed. The Supreme Court held that the Water Industry Act 1991 does not, expressly or by necessary implication, bar common law actions in private nuisance or trespass brought by owners or persons interested in watercourses in respect of polluting discharges of foul water from sewerage undertakers where the statutory contravention is not an essential ingredient of the cause of action. The court distinguished Marcic (which concerned a claim that depended essentially on a statutory duty to construct new sewers) and emphasised that statutory provisions (notably sections 117(5) and 186(3)) manifest parliamentary intent not to authorise such pollution and to preserve common law remedies; section 18(8) provides only a qualified ouster limited to causes of action that depend essentially on contraventions of statutory duties.

First instance: Fancourt J, High Court (Chancery Division) [2021] EWHC 1571 (Ch) (declaration in favour of United Utilities). Court of Appeal: [2022] EWCA Civ 852 (appeal dismissed). Appeal to the Supreme Court: [2024] UKSC 22 (appeal allowed).