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Manchester Ship Canal Company v United Utilities: Clarification on the Powers of Statutory Sewerage Undertakers

Another week another Supreme Court decision which affects the environmental sector.  I will ignore the bus analogy, but I am sure you will get the gist!

In June we had the monumental Finch decision which stated that an EIA must assess the downstream effects on the climate arising from the combustion of the hydrocarbons produced by the project.  Now we have the eagerly anticipated decision on the Manchester Ship Canal Company (MSCC) v United Utilities (UU) (No 2) case.  Yes No 2 as they have argued similar issues before.  This case is not about quantum or whether MSCC has a good claim against UU, but is simply about whether MSCC (or other parties and landowners for that matter) have the right to bring a claim under nuisance and trespass for unauthorised acts done or attributed to a statutory sewerage undertaker (in this case UU).

Some context as to why the answer provided by the Supreme Court is important.  The MSCC owns the Manchester Ship Canal (no surprises there surely, the clue is in the name), it was constructed in accordance with its own act of parliament in 1885 and links Manchester to the Mersey Estuary, then bypassing the Port of Liverpool and its then stranglehold on trade into the North West (the irony now is that it is owned by the same company). As the owner of the Manchester Ship Canal, MSCC also owns the canal bed, the banks and various pieces of land on either side of the canal.  As a riparian owner it is also responsible for the quality of water in the water course.

UU is the statutory undertaker in the region and is responsible for treating and discharging treated foul water into surface watercourses with permission from the regulatory body, the Environment Agency and MSCC.  It has various and wide-ranging powers under the Water Industry Act 1991 (the Act) which allows it to undertake activities which do not require permission.  UU, however, has been discharging foul water into the ship canal and this MSCC is not authorised by any permit or act of parliament.  These discharges are damaging the ship canal and the peaceful enjoyment of MSCC of its asset in addition to UU trespassing on its property and landowner rights via the unauthorised discharges.

UU argued it had immunity from any claim as it was acting in accordance with its powers and rights under the Act, but in the same way as the Supreme Court in America has just ruled in the Trump case, that immunity can only be used in a limited and specific way to acts done which is authorised by the Act itself.

As such the Supreme Court stated:

A body which exercises statutory powers, such as a sewerage undertaker, is liable in the same way as any other person if it is responsible for a nuisance, trespass or other tort, unless with it (i) is acting within its statutory powers, or (ii) has been granted some statutory immunity from suit.  If a sewerage undertaker interferes with a person's rights, it is therefore necessary to distinguish between interferences which Parliament has authorised, which are unlawful, and interferes which Parliament has not authorised which are unlawful. When drawing this distinction, two principles are relevant. First, a person's rights to the peaceful enjoyment of its property and to access the courts are protected by both common law and the Human Rights Act 1998. The principle of legality holds that fundamental rights cannot be overridden by general or ambiguous words. A statute will, therefore, only authorise what would otherwise be an unlawful interference with property rights, or deprive a person of the right to bring a legal claim, if this is clear from or a necessary implication of the express language used by Parliament. Secondly, Parliament will not be taken to have intended that statutory powers should be exercised, or duties performed, in a way which interferes with private rights, unless the interference is inevitable.”

As the Act does not allow (quite rightly) for unauthorised discharges to be made into surface watercourses, then it must follow that any discharges not authorised by the Act or any other act of parliament must be subject to compensation in the usual way under common law.

This is an important point to note because if the discharges were authorised as many “clean” discharges are, then any damage caused would be covered by the compensation provisions under the Act. The compensation payable by the statutory undertakers being relatively modest, but as the foul water discharges are not authorised then the compensation provisions under the Act do not apply which on the face of it seems rather perverse, but supports the proposition put forward by the Supreme Court that unauthorised acts by any body cannot usurp the peaceful enjoyment of private rights enjoyed by a landowner.

This case has been referred to as a “watershed” moment by many, surpassing that of Finch.  It is certainly a monumental decision which fundamentally sets out the rights of private landowners which statutory bodies should be aware of.  I would urge all environmental, property and litigation lawyers to read the judgment in full and can be found here.

In the theme of another epic July event “chapeau” to MSCC.

If you or your clients are in need of assistance in any claim or advice in relation to the powers and rights of statutory undertakers please do get in touch.

“Any watercourse owner will now have a right to bring claims in common law nuisance in respect of pollution to their water, whether directly or upstream, and to seek injunctions to restrain polluting activity by any sewerage undertaker and/or damages for the unlawful interference with the watercourse.””