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

A sewerage undertaker may be liable in nuisance or trespass for polluting discharges into a watercourse where its system operates as designed, even if avoiding the pollution requires new infrastructure. The Water Industry Act 1991 preserves common law remedies unless breach of an enforceable statutory duty is an essential ingredient of the cause of action.

The statutory scheme may constrain the grant of an injunction that would disrupt regulated capital expenditure. It does not exclude damages for past pollution or equitable damages for future or repeated invasions. Public interest affects the remedy rather than liability.

The Canal Company owns the beds and banks of the Manchester Ship Canal. United Utilities operates sewerage infrastructure containing outfalls which discharge foul water into the canal when the system’s hydraulic capacity is exceeded. The system is designed to operate in that way, although improved infrastructure and treatment could avoid the discharges.

United Utilities obtained a declaration in the High Court, upheld by the Court of Appeal in [2022] EWCA Civ 852, that the Canal Company could not sue in nuisance or trespass without alleging negligence or deliberate wrongdoing. The lower courts considered the claims inconsistent with the regulatory scheme under the Water Industry Act 1991, applying Marcic v Thames Water Utilities Ltd.

The central issue was whether the 1991 Act excludes common law claims concerning unauthorised polluting discharges from sewerage infrastructure into watercourses.

1. Appeal allowed unanimously. Lord Reed and Lord Hodge delivered the judgment, with which all other members of the court agreed. The Water Industry Act 1991 neither authorises the discharge of untreated sewage into watercourses nor excludes ordinary claims in nuisance or trespass arising from such discharges.

2. An owner or riparian proprietor has a property right to preserve the quality of water. A polluting discharge which unduly interferes with the use or enjoyment of the relevant property is actionable in private nuisance. Liability for a nuisance caused or adopted by the defendant does not depend upon negligence or deliberate wrongdoing. Sections 117(5), 117(6), 186(3) and 186(7) preserve, and are predicated upon, the continued existence of common law rights and remedies.

3. Section 18(8) is a qualified ouster. It excludes a cause of action only where contravention of an appointment condition, licence condition or enforceable statutory requirement is an essential ingredient. It expressly preserves an independently existing common law claim even where the same conduct also contravenes section 94(1). The absence of compensation for unauthorised pollution, contrasted with compensation for authorised exercises of statutory power under section 180 and Schedule 12, paragraph 4, reinforced that construction.

4. Marcic v Thames Water Utilities Ltd [2003] UKHL 66 was distinguished. That case concerned an involuntary escape from overloaded sewers which had not been designed to emit sewage. Liability depended upon alleging a failure to construct a new sewer, a duty arising only under section 94(1) and enforceable through section 18. Here, United Utilities caused or adopted the alleged nuisance because its system deliberately discharged effluent when capacity was exceeded. Its liability therefore did not depend upon breach of the statutory duty to construct infrastructure.

5. The statutory regulatory scheme may weigh against an injunction requiring substantial capital works where that remedy would conflict with regulated investment priorities. That consideration concerns remedy, not liability. Damages remain available at common law for accrued invasions and under section 50 of the Senior Courts Act 1981 for future or repeated invasions in substitution for an injunction.

1. United Kingdom Supreme Court: The appeal was allowed unanimously. The declaration granted below was set aside.

2. Court of Appeal: In [2022] EWCA Civ 852; [2023] Ch 1, the court upheld the High Court’s decision, holding that Marcic excluded the proposed common law claims.

3. High Court: In [2021] EWHC 1571 (Ch); [2021] 1 WLR 5871, Fancourt J declared that, absent negligence or deliberate wrongdoing, the Canal Company could not sue in nuisance or trespass for discharges contravening sections 117(5) or 186(3) of the Water Industry Act 1991.