Manchester Ship Canal Company Ltd v United Utilities Water PLC  UKSC 40
Discharges of surface water and treated effluent into watercourses for the most part are licensed under the permitting regime which exists to regulate and prevent pollution: see, for instance the Environmental Permitting (England and Wales) Regulations .
Whilst discharges are regulated, the question of whether an undertaker has a right to discharge without the permission from the owner of a private watercourse is a separate matter.
In the recent case of Manchester Ship Canal Company Ltd v United Utilities Water PLC  UKSC 40 2 July 2014 the Supreme Court considered whether a sewage undertaker has a statutory right to discharge surface water and treated effluent into a private watercourse without the consent of the owner.
Implied right to discharge
Although there was common ground between the parties that no express statutory right to do so existed, the questions remained, is there an implied right to do so and if so, does it exist for new discharges as well as those existing before the privatisation of the water industry?
In answering these questions, Lord Sumption gave the leading judgment. Lords Toulson and Neuberger also reached generally the same conclusions but gave greater or lesser weight to the historical legislative issues in determining how these rights may arise.
As Lord Sumption explained, to establish such a right, it would need to be demonstrated that it is implied in the express terms of the statute, or that “the statutory purpose cannot be effectually achieved without the implication” (para 2).
He went on to examine the nineteenth-century case of Durrant v Branksome Urban District Council  2 Ch 291 in which the Court of Appeal interpreted the Public Health Act 1875 as impliedly conferring on local authorities the right to discharge into private watercourses. That right derived from s 17 of the 1875 which required that only treated water should be discharged (“freed from excrementitious or other foul or noxious matter”) - the implication being that if only treated effluent is to be discharged, then there must be a right to discharge.
Similar provisions were carried through subsequent statutes including the Public Health Act 1875 with “no material change”.
Post privatisation and the Water Industry Act 1991
The Water Act 1989 (WA) transferred functions and assets and rights to the commercial sewage undertakers. The Water Industry Act 1991 (WIA) then consolidated earlier legislation.
Certain sections of the 1875 Act – including s17 (only to discharge treated sewage) reappear in altered form in ss 117 (5) and (6) of the WIA which, in short, require that there be no discharge in contravention of the Water Resources Act 1991 or without treatment and without creating a nuisance.
The two crucial sections upon which the present case turned are ss 116 and 159 of the WIA which, on first reading, do not immediately and obviously suggest such a right to discharge – but both sections express powers which arguably imply associated rights.
116 Power to close or restrict use of public sewer.
(1)Subject to subsection (3) below, a sewerage undertaker may discontinue and prohibit the use of any public sewer which is vested in the undertaker.
(2)A discontinuance or prohibition under this section may be for all purposes, for the purpose of foul water drainage or for the purpose of surface water drainage.
(3)Before any person who is lawfully using a sewer for any purpose is deprived under this section by a sewerage undertaker of the use of the sewer for that purpose, the undertaker shall—
(a)provide a sewer which is equally effective for his use for that purpose; and
(b)at the undertaker’s own expense, carry out any work necessary to make that person’s drains or sewers communicate with the sewer provided in pursuance of this subsection.
159 Power to lay pipes in other land.
(1)Subject to the following provisions of this section, to section 162(9) below and to the provisions of Chapter III of this Part, every relevant undertaker shall, for the purpose of carrying out its functions, have power—
(a)to lay a relevant pipe (whether above or below the surface) in any land which is not in, under or over a street and to keep that pipe there;
(b)to inspect, maintain, adjust, repair or alter any relevant pipe which is in any such land;
(c)to carry out any works requisite for, or incidental to, the purposes of any works falling within paragraph (a) or (b) above.
If the implied right to discharge into private watercourses derived from s 159, there would be no protection for those whose waters receive the discharges. For instance, there would be no corresponding requirement that the discharge is treated as required under s 117. On the other hand, s 116 of the WIA, which prevents an undertaker from discontinuing the use of a sewer until an alternative sewer has been found, unlike s 159, is qualified by s 117 which provides protection for the owner of the receiving watercourse.
s 159 and British Waterways Board v Severn Trent Water 
After examining the evolution of the provisions, Lord Sumption considered two possibilities for implied rights: either as in Durrant’s case, discharges were authorised for existing and future sewage outfalls or only for discharges which were in existence on 1st December 1991 when the statute came into force.
The water company in the Manchester Ship Canal case argued that a broader and more general right as considered in Durrant continued in the WIA and derives from the power to lay pipes across private land “for the purpose of carrying out its functions” under s 159. But as Lord Sumner comments “the problem which confronts this argument is that the particular provisions of the earlier legislation which justified the implication of such a right before 1991 are re-enacted in the Water Industry Act 1991 in a somewhat different form and as part of a much more elaborate statutory scheme in which such an implication is more difficult to accommodate.” (para 13)
The argument that s 159 bestows such general rights was rejected by the Court of Appeal in British Waterways Board v Severn Trent Water . The court gave several reasons why it could not imply rights from previous statutes into this section. They included, importantly that, on a narrow reading, s159 deals with the laying of pipes not with discharges; furthermore, such outfalls would not be subject to the protection provided under s 117 (5) and (6) against foul water discharges. That meant that if such a right did exist through s 159, it would effectively authorise treated and untreated discharges in unlimited quantities.
S 116 of the Water Industry Act 1991
Lord Sumption summarises the position of the preferred option of the right implied through s 116:
In my opinion, when the Water Industry Act 1991 (i) imposed on the privatised sewerage undertakers duties which it could perform only by continuing for a substantial period to discharge from existing outfalls into private watercourses, (ii) at the same time applied to them the statutory restrictions in section 116 on discontinuing the use of existing sewers, it implicitly authorised the continued use of existing sewers. A restriction on discontinuing the use of an existing sewer until an alternative has been constructed is not consistent with an obligation to discontinue its use forthwith under the law of tort. The inescapable inference is that although there is no provision of the Act of 1991 from which a general right of discharge into private watercourses can be implied, those rights of discharge which had already accrued in relation to existing outfalls under previous statutory regimes survived (para 19).
But, what of the consequences for those (like the Manchester Ship Canal Company or the Canal and River Trust – i.e. private watercourse owners) – over whose property such a right has been confirmed? Lord Sumption notes that “as far as compensation is concerned, Schedule 12, paragraph 4 of the Water Industry Act confers a right of full compensation for any exercise by a sewerage undertaker of its powers under the “relevant sewerage provisions” (para 22). He then goes on to list statutory safeguards “against the abusive or harmful use by undertakers of their statutory powers” including sections 117(5) and 186(3). Importantly, “both provisions expressly qualify powers derived from specified provisions of the Act, which do not include section 159 but do include section 116” (para 22).
Although going on to allow the appeal to the extent of declaring that the appellants were entitled to continue to discharge into the respondents’ canals from pre-1st December 1991 outfalls, he adds that “this in no way affects any binding agreement under which the parties may have regulated for themselves the use of particular outfalls.“
There is an implied statutory right to discharge treated sewage and surface water into private watercourses where the outfall has been in existence since before December 1991. It follows that a landowner such as the Manchester Ship Canal Company or the Canal and River Trust will not be entitled – unless a contractual agreement is in existence - to charge for such an outfall - or even to withdraw permission for its use.
Lord Sumption puts forwards a set of reassuring reasons why this does not put the landowner at a disadvantage. One might add that there is a system of regulatory control of such discharges – but the private waterway’s owner’s right to make a profit from such discharges no longer exists.
Most importantly, the case highlights what might well become an area of tension between those bodies which have a statutory duty to drain their local area and to maintain a public service and those who receive discharges in increasing quantities.
Justin Neal, Irwin Mitchell
First appeared in Environmental Law Monthly – September 2014. Reprinted with permission of Singlelaw.