Manchester Ship Canal Co v United Utilities Ltd

The case is sure to be much studied by water lawyers, Ofwat and the water and sewerage undertakers. The case is a study on how common law and consolidating regulatory statute interact, and the practical tools and canons of interpretation to be used to interpret the relevant provisions.

Beyond this some key points to note are that:

• the Marcic line of authority has been confined to cases involving accidental capacity related “escapes” of sewage (e.g. backing up through a manhole cover) onto land, as in these cases it is essential to plead a legal duty to build more sewers to fall within Sedleigh-Denfield/Goldman v Hargrave principles (see [82]-[85], [90]), but is of no application to designed/deliberate discharges into watercourses;
• the Dobson line of authority, which was based on a different understanding of the effect of Marcic, is no longer good law (see [93]-[96], [115]);
• careful attention will need to be paid to remedies where nuisance is shown, but even if an injunction (or an immediate injunction) is not appropriate on public interest grounds (where the Fearn debate will no doubt continue), damages (including damages in lieu of an injunction) will be available.

Such principles are drawn together at [131] where Lord Reed states:

…..we are accordingly of the view that, even if there may well be cases where it is not appropriate to grant an injunction as a remedy for claims of nuisance or trespass concerning the pollution of watercourses by sewerage undertakers, a remedy can nevertheless be given in such cases in the form of an award of damages. Such an award does not cut across the statutory scheme in the 1991 Act: on the contrary, it gives effect to express provisions in that Act, including sections 117(5) and 186(3). Further, the award of damages does not force the sewerage undertaker to depart from the prioritisation of capital investment on improvements to the sewerage system which it has agreed with the regulatory authority. The award of damages vindicates the property rights in relation to watercourses until the sewerage undertaker is in a position, with the approval of Ofwat, to invest in a long-term solution to prevent the harm to the claimant’s property. A successful claim for damages for an incident or incidents of pollution of a watercourse will impose costs on a sewerage undertaker; but the effect is merely to prevent it from externalising the costs of its operations by leaving them to be borne by the victims of its unlawful behaviour.

Tom de la Mare KC and George Molyneaux acted for the Appellant, MSCC, along with Charles Morgan and Nicholas Ostrowski, instructed by BDB Pitmans LLP

Tom Cleaver acted for the Intervener, the Environmental Law Foundation, with Stephen Hockman KC instructed by Hausfeld LLP

The judgment is available here.

The UKSC’s Press Release to this complex judgment is here.