Canal company can bring common law claim for nuisance and trespass over sewage discharge, Supreme Court rules

The Supreme Court has affirmed that a canal company can pursue common law claims against United Utilities for nuisance and trespass due to the discharge of untreated effluent into its canal.

In The Manchester Ship Canal Company Ltd (Appellant) v United Utilities Water Ltd (Respondent) (No 2) [2024] UKSC 22, the Supreme Court ruled that the Water Industry Act 1991 did not prevent a canal company from bringing a claim in nuisance or trespass when the canal is polluted by discharges of foul water from its sewage undertaker's outfalls, even if there has been no negligence or deliberate misconduct.

The case centred on a dispute between Manchester Ship Canal Company (MSCC), which owns the beds and banks of the Manchester Ship Canal, and United Utilities (UU), the sewage undertaker for the North West of England, which owns a network of sewers, which in some cases discharge into the Manchester Ship Canal.

The MSCC brought a judicial review against UU in 2021, which raised the issue of whether it has any common law claim in trespass or nuisance against UU in respect of discharges from outfalls that are not authorised by statute (in effect, untreated foul water discharges that prejudicially affect the quality of the water in the canal).

The High Court considered the question was of the claim would be inconsistent with and, therefore, barred by the statutory scheme for regulating sewerage established by the Water Industry Act 1991.

The High Court judge found that the discharge of inadequately treated effluent was unlawful, but it occurred without United Utilities doing anything to cause it, and there was nothing they could do to prevent it, except by carrying out improvements to the sewerage system".

A declaration was granted by the High Court that: "where a discharge into the canal from sewers vested in United Utilities contravenes sections 117(5) and/or 186(3) of the Water Industry Act 1991, the Canal Company may not bring an action in trespass or nuisance against United Utilities in respect of such discharge absent an allegation of negligence or deliberate wrongdoing on the part of United Utilities leading to the said discharge."

Fancourt J's decision was upheld by the Court of Appeal, leading to the canal company appealing to the Supreme Court.

Supreme Court justices Lord Reed, and Lord Hodge set out the decision, with whom Lord Lloyd-Jones, Lord Burrows, Lord Stephens, Lady Rose and Lord Richards agreed.

Summarising the background, the two Supreme Court justices said: "The implication of the judgments in the courts below is that, absent an allegation of negligence or deliberate wrongdoing, no owner of any watercourse or body of water can bring any claim based on nuisance or trespass against any sewerage undertaker in respect of polluting discharges into the water, however frequent and voluminous the discharges may be, and however damaging they may be to the owner's commercial or other interests or to the owner's ability to use or enjoy its property."

United Utilities argued that the canal company had no cause of action because the only way to avoid the discharges of foul water into the canal would be to construct new sewerage infrastructure, which went against the House of Lords' decision in Marcic v Thames Water Utilities Ltd [2003] UKHL 66.

The company claimed that Marcic established that Parliament's intention with the 1991 Act was that the construction of new sewerage infrastructure should be a matter for the Secretary of State or the regulator, the Water Services Regulation Authority known as Ofwat, not the courts.

However, the Supreme Court rejected this argument, finding that there are a number of indications that Parliament did not intend the 1991 Act to exclude a claimant's right to enforce its private property right in a watercourse.

It highlighted that section 186(7) of the 1991 Act provides for arbitration where water quality has been damaged without consent at the option of the party complaining, which "strongly suggests" that the complainant could alternatively choose to pursue a common law claim.

It also noted that section 180 of the 1991 Act and schedule 12 make provision for compensation for damage caused by the authorised acts of sewerage undertakers, but no compensation for damage caused by acts of sewerage undertakers which are unauthorised.

The judgement said: "If persons who suffer such damage are also deprived of a right of action which would otherwise be available to them at common law, the result is that the victims of unauthorised interferences with their property are treated less favourably than the victims of authorised interferences."

They added: "Such a result would, as Mr de la Mare [the canal company's barrister] submitted, be perverse."

The Supreme Court also found that depriving the victims of a nuisance or trespass of their common law rights of action would be a "substantial change" to the law as it stood before the 1991 Act was enacted.

The Supreme Court unanimously allowed the canal company's appeal.

Adam Carey