The Manchester Ship Canal Company Limited v Secretary of State for Environment, Food and Rural Affairs & Anor

The Court of Appeal dismissed MSC’s appeal against Thornton J’s dismissal of its challenge under section 23 of the Acquisition of Land Act 1981 to the Secretary of State’s confirmation of the United Utilities Water Limited (Eccles Wastewater Treatment Works) Compulsory Purchase Order 2016. The principal legal issues were (i) whether the judge misunderstood MSC’s case at the public inquiry about the need for a rider (the "discharge proviso") to preserve statutory and common law protections when creating a new right to discharge under section 155 of the Water Industry Act 1991; and (ii) whether confirming the CPO without that proviso unlawfully interfered with MSC’s property rights under article 1 of the first protocol to the European Convention on Human Rights (A1P1).

• The court held that the judge did not misunderstand MSC’s closing submissions to the inspector: MSC had sought the proviso at the inquiry but had not advanced evidence before the inspector showing how the proviso would operate or what additional protection it would give in practice.
• The court accepted that the question whether the absence of the proviso would preclude common law claims for nuisance or negligence was logically prior, but it was not argued before the inspector and was not fully argued before the Court of Appeal; the court therefore did not decide that question.
• On proportionality under A1P1 the court concluded that confirmation of the CPO without the discharge proviso was lawful and proportionate: the CPO pursued legitimate public interests (water quality and flood risk), discharges would be regulated by the Environment Agency, and compensation under the compulsory purchase code was available to MSC.

Background and parties: MSC owns and operates the Manchester Ship Canal. United Utilities sought compulsory rights under section 155 of the Water Industry Act 1991 to construct a new 1.16 km pipe discharging “water, soil and effluent” into the canal, replacing four pre-1991 outfalls. The Secretary of State confirmed the CPO after an inspector’s report following a 29-day public inquiry. MSC challenged the confirmation under section 23 of the Acquisition of Land Act 1981.

Nature of the claim and relief sought: MSC sought to quash the Secretary of State’s decision to confirm the CPO unless it was qualified by a "discharge proviso" modelled on protections in the Water Industry Act (notably section 117(5) and section 186(3) and Schedule 12 para 4) so as to preserve statutory and common law protections (including remedies for nuisance and trespass) in respect of any discharge from the new outfall.

Procedural posture: The judge below (Thornton J) dismissed MSC’s s.23 challenge ([2022] EWHC 3282 (Admin)). MSC appealed to the Court of Appeal.

Issues framed:

• whether the judge misunderstood MSC’s position at the inquiry about private law remedies and thus erred in rejecting MSC’s complaints concerning A1P1;
• whether the judge’s approach to the fair balance (proportionality) under A1P1 was flawed because it did not consider a less intrusive measure (the CPO with the discharge proviso);
• whether the omission of the proviso unlawfully interfered with MSC’s A1P1 rights in light of the Supreme Court’s decision in United Utilities Water Ltd v Manchester Ship Canal Co Ltd [2024] UKSC 22 (MSC (No.2)).

Court’s reasoning and findings: The Court of Appeal concluded that the judge had not misunderstood MSC’s submissions to the inspector: MSC had pressed for the proviso at the inquiry but had not put evidence to show how it would operate or what additional protection it would provide. The court accepted that the question whether MSC could bring common law claims without the proviso was logically antecedent to whether the proviso was necessary, but that question had not been the subject of full argument before the inspector or before the court and therefore was not decided. On A1P1 the court applied the proportionality (fair balance) analysis and concluded that confirming the CPO without the proviso was in accordance with law and proportionate: (a) the CPO pursued important public interests (improving water quality and reducing discharges), (b) discharges under the new outfall would be regulated and enforced by the Environment Agency, (c) criminal and enforcement sanctions exist for permit breaches, and (d) MSC has access to a statutory compensation regime under the compulsory purchase code. The court therefore saw no impermissible interference with A1P1 rights.

Subsidiary findings and broader context: The court acknowledged that some of the judge’s earlier statements about the availability of nuisance claims were overtaken by the Supreme Court’s later decision in MSC (No.2), but considered that statement immaterial to the outcome because the logically prior question of the existence and scope of common law remedies had not been argued before the inspector. The court noted the rarity and structure of remedies in the compulsory purchase / water regulation context: public inquiry scrutiny, environmental permitting and compensation together formed a lawful and proportionate statutory scheme for new outfalls created under s.155.

The appeal was dismissed. The Court of Appeal held that the judge below had not misunderstood MSC’s position at the inquiry; the issue whether common law private law remedies would be available absent the discharge proviso was not properly argued before the inspector or fully argued before the court and was therefore left undecided; and, on proportionality grounds, confirming the CPO without the discharge proviso was lawful and proportionate because the scheme pursued legitimate public interests, the Environment Agency’s permitting regime would regulate discharges, and statutory compensation was available.

Appeal from the High Court (King's Bench Division, Planning Court, Thornton J) [2022] EWHC 3282 (Admin); appeal to the Court of Appeal resulting in judgment [2025] EWCA Civ 676.