Troubled Waters: Implications of the Manchester Ship Canal Case 

On 2 July, the UK Supreme Court handed down the much-awaited judgment in the Manchester Ship Canal case. 

In a victory for property rights, the Supreme Court held that owners of private watercourses may claim against sewerage undertakers who discharge untreated sewage into private watercourses. United Utilities had argued, based on an earlier case, Marcic, that such claims were barred by the statutory scheme for regulating the sewerage industry established by the Water Industry Act 1991 ("1991 Act"). 

The dispute between the parties has been running for almost a decade.  During its passage through the court system, there has been a growing scrutiny of and public interest in deteriorating water quality, including in relation to untreated sewage discharges.  

While the case is unlikely to immediately prevent discharges of untreated sewage into watercourses, it is likely to result in watercourse owners seeking to charge sewerage undertakers for such discharges. 

More generally, it would be prudent for businesses whose activities give rise to trade effluent to carry out a review of their discharge consents and drainage plans.  

The facts

As the name suggests, The Manchester Ship Canal Company Ltd ("MSCC") owns the Manchester Ship Canal (the "Canal"), which links Manchester to the Irish Sea via the Mersey Estuary. The MSCC therefore has a right of property in the watercourse. United Utilities is the statutory sewerage undertaker in the North West. It owns the network of sewers, sewage treatment works and associated infrastructure in its area. 

Along the length of the Canal, there are around 100 outfalls, from which material from sewers, sewage treatment works and pumping stations is discharged into the Canal. When United Utilities' infrastructure operates within its hydraulic capacity, discharges into the Canal are of surface water or treated effluent (i.e., they are 'clean', in simple terms). However, when the hydraulic capacity of the system is exceeded, some of the outfalls discharge untreated sewage into the Canal. This is how the system, which United Utilities acquired upon privatisation in 1989, has been designed to operate. 

As foul water was being discharged into the Canal without their consent, the MSCC sought to claim against United Utilities. Their claim is grounded in the common law of nuisance and trespass. With a view to defeating the claim at the outset, United Utilities asked the court to make a declaration that the MSCC was barred from bringing a common law claim. 

The case therefore concerns whether the MSCC is able to bring a common law claim against United Utilities, or whether MSCC is barred from bringing such a claim by virtue of the statutory scheme for regulating sewerage undertakers, set out in the 1991 Act. 

Both the High Court and the Court of Appeal agreed with United Utilities, granting a declaration barring the MSCC from bringing a claim in nuisance and trespass against United Utilities. The matter then came before the Supreme Court. 

The parties' cases

United Utilities argued that because the discharges were a breach of its general statutory duty to provide a sewerage system (under s.94 of the 1991 Act), the appropriate remedy was by way of enforcement against United Utilities by the Secretary of State or Ofwat, the water regulator. They argued that the MSCC's private law rights were overridden by the statutory provisions under the 1991 Act. As part of their case, United Utilities argued that issues concerning the construction of new infrastructure – which would be required to prevent the discharges into the Canal – should be dealt with by the regulators and not the Courts. In advancing their case, United Utilities relied on the earlier case of Marcic which held that Mr Marcic's claim in nuisance against the local sewerage undertaker for sewage overflows into his property, was excluded under the 1991 Act because it created a statutory enforcement mechanism (which excluded common law claims). 

In response, the MSCC argued that when the 1991 Act was properly construed, there was no such bar on bringing claims in nuisance and trespass against sewerage undertakers. 

The Supreme Court's judgment 

In a unanimous judgment, the Supreme Court held that the 1991 Act does not bar the MSCC from bringing a claim in nuisance or trespass against United Utilities where the Canal is polluted by untreated effluent from United Utilities' sewage outfalls. 

The Court confirmed that any erosion of private law rights by Parliament must be made by either express language or necessary implication (which is a high hurdle). The Court found that Parliament has not, in the 1991 Act, expressly or impliedly granted authority to sewerage undertakers to cause a nuisance by discharging untreated sewage into watercourses. 

The Court further held that, when the 1991 Act is properly interpreted, there is no express or implied removal of common law causes of action where a watercourse has been affected by discharges of untreated effluent. Rather, in such a case, independent common law rights survive, and a remedy remains available to protect an owner's property rights. 

Comment

The Court's judgment has clarified that owners of watercourses will be able to claim against sewerage undertakers in respect of water pollution from outfalls.

In doing so, the Court has drawn a fine line between cases which have, as an 'essential ingredient' a breach of statutory duty by the sewerage undertaker, and independent common law claims (of which this claim is one). In the former type of cases, which frequently concern a failure to construct enough sewers as in the Marcic case, those aggrieved will be barred from bringing common law claims. In the latter, which concern independent common law claims, the Court has confirmed that such claims may be brought against sewerage undertakers. The application of the doctrine in Marcic, has therefore been narrowed, opening the door to potential claims against sewerage undertakers.   

While this case is between the MSCC and United Utilities, it will apply more generally to all UK sewerage undertakers. Whilst claims can therefore be anticipated; however, in practice, this case will most likely encourage the entry into licences between the sewerage undertaker and the watercourse owner – accompanied by a licence fee and potentially back payments or damages for earlier discharges. Time will tell whether putting a price on these discharges will drive change to sewerage infrastructure, however, this case is an illustration of the growing scrutiny of the causes of the UK's deteriorating water quality. More generally, it would be prudent for businesses whose activities give rise to trade effluent to carry out a review of their discharge consents and drainage plans.