Sewerage undertakers open to claims after Manchester case

In an extra-length Legal Note, Louise Clark analyses an important Supreme Court ruling that sewerage undertakers are open to claims in nuisance for discharges of foul water. Key points The discharge of polluting effluent into privately owned watercourses is capable of being an actionable nuisance at common law The Water Industry Act 1991 excludes challenges to undertaker’s statutory duties but preserves common law rights in nuisance or trespass In a potentially ground-breaking decision, the Supreme Court has allowed the canal company’s appeal in Manchester Ship Canal Co Ltd v United Utilities Water Ltd (No 2) [2024] UKSC 22; [2024] PLSCS 121. Background The case concerned discharges of foul water into the Manchester Ship Canal, the beds and banks of which were owned by the appellant. The respondent, United Utilities, was the statutory sewerage undertaker for the North West of England. Its network included around 100 outfalls from which material emanating from sewers, sewage treatment works and pumping stations was discharged into the canal. When the system operated within its hydraulic capacity, the discharges were of surface water or treated effluent, but when that capacity was exceeded – because the inflow was greater than it could accommodate or due to mechanical failure or loss of power – some of the outfalls discharged foul water into the canal. The discharges were not due to negligence or deliberate wrong-doing but could be avoided by investment in improved infrastructure and treatment processes. The issue The issue for determination was whether – as the canal company argued – United Utilities required the canal company’s consent to discharge foul water into the canal and had therefore to pay a fee for a licence or – as United Utilities claimed – it could pollute the canal without such consent and free of charge because the Water Industry Act 1991 prevented claims in nuisance or trespass. United Utilities’ claim for a declaration to that effect succeeded in the High Court and the Court of Appeal dismissed the canal company’s appeal. Relationship between tort and statute It is necessary to distinguish between a continuing nuisance, where repeated activity by the defendant causes continuing undue interference with the claimant’s use and enjoyment of its land, and continuing a nuisance, where the defendant is responsible not because it created the nuisance but because with actual or constructive knowledge of the circumstances which resulted in the nuisance, it failed to take steps to prevent it. It is not a defence that the defendant’s activity is of public benefit and bodies exercising statutory powers only have dispensation from the common law to the extent statute provides. A statute will only authorise what would otherwise be an unlawful interference with property rights or deprive a person of their right to bring a legal claim if it is clear from or a necessary implication of the express language used. Parliament will not be taken to have intended that statutory powers should be exercised in a way which interferes with private rights unless the interference is inevitable. The Supreme Court reviewed the legislation and case law relating to the pollution of watercourses until privatisation of the water and sewerage industries in 1989 and concluded: 1. At common law the pollution of a watercourse is an actionable nuisance and may also constitute a trespass. 2. The common law rights of those affected by pollution resulting from the activities of sewerage authorities acting under statutory powers must be measured as left by the legislature. Public welfare considerations do not justify denying relief to private persons whose rights are affected. 3. Parliament has consistently: a. Provided specific protection against the pollution of watercourses by sewage; b. Required the sewerage authorities to obtain the consent of those who would be entitled to prevent such action or claim damages, before injuriously affecting a watercourse by the construction or operation of sewerage works; c. Provided for arbitration of the question of injurious affection at the option of the complainant which reflects the availability of common law remedies as an alternative; d. Made it clear that it is not authorising the pollution of watercourses by sewage; and e. Provided for payment of compensation to those injuriously affected by the exercise by sewerage authorities of their statutory powers. 4. Sewerage authorities are liable if they carry out operations resulting in a nuisance which is not authorised by statute and where no immunity is conferred. So, where the sewerage system is operating as it was designed to do the operator is responsible for any resulting nuisance even if the nuisance is due to the authority’s failures to perform its statutory functions. 5. But a claim cannot be brought against an authority at common law where it is an essential ingredient of the cause of action that the authority has failed to drain its district effectually because this is a statutory obligation. Consequently, no action lies in respect of an involuntary escape of sewage resulting from the inadequate capacity of a public sewer where the authority has no control over the factors resulting in the inadequacy. 6. The courts have consistently affirmed the importance of injunctions as a remedy for nuisance caused by the pollution of watercourses but have balanced this with the public interest in preserving the effective removal of sewage by generally suspending the effect of an injunction to allow the authority time to take action to prevent further pollution. The 1991 Act consolidates enactments relating to the supply of water and the provision of sewerage services and demonstrates a continuity of the parliamentary policy seen in earlier legislation. Consolidating statutes are not intended to make substantial changes to the law. The decision The starting point for the Supreme Court in considering the competing claims was to recognise that a riparian owner has a right of property in the watercourse which includes a right, protected by the common law, to preserve the quality of the water. Those rights are not excluded by the 1991 Act expressly or by implication. On the contrary, common law rights to protect property interests survive: A sewerage undertaker is not authorised to discharge untreated effluent into watercourses (section 116). Such discharge was not the inevitable consequence of performance under the 1991 Act and could be avoided by investment in improved infrastructure and better treatment processes. The exercise by undertakers of their statutory functions so as to create a nuisance is prohibited (section 117). The availability of arbitration over water quality, at the option of the complaining party (section 186), would have no purpose unless a common law remedy is available. Common law remedies remain available where contravention of a statutory obligation is not an essential ingredient of the cause of action (section 18). The Supreme Court accepted that the scheme of the 1991 Act might be disrupted if injunctions were granted requiring sewerage undertakers to spend large sums to create new infrastructure as a remedy for interference with property rights but, while the court’s exercise of its discretion might be constrained where the grant of an injunction would be inconsistent with the operation of the statutory mechanisms, there was no basis for excluding a common law claim or award of damages. United Utilities relied heavily on the decision in Marcic v Thames Water Utilities Ltd [2003] UKHL 66; [2003] PLSCS 268, where the claimant failed in his claim in nuisance and breach of his human rights for repeated flooding of his property and back up of sewage when heavy rain overloaded both a surface and a foul water sewer. The cause of action failed because it focused on Thames’ failure to perform a statutory obligation to construct a new sewer under section 94 of the 1991 Act. The Supreme Court distinguished Marcic since it did not, as here, engage the statutory provisions limiting the discharge of effluent into watercourses without consent and Thames had neither created nor adopted the nuisance. The sewers, adequate when built, had become inadequate as additional houses were built with a statutory right to connect to them. United Utilities was responsible for discharges of noxious effluent into watercourses which occurred as a result of its system operating as designed when its hydraulic capacity was exceeded. If the discharges constituted a nuisance, it was one United Utilities had caused or adopted and if they constituted a trespass United Utilities was responsible for committing it. Neither tort was authorised by parliament or common law rights of action excluded. Louise Clark is a property law consultant and mediator Image © Joseph Russo/Pexels