Marcic v Thames Water Utilities Ltd [2003] UKHL 66

A homeowner whose property was repeatedly flooded by an overloaded public sewer sued the statutory undertaker. The House of Lords held that the comprehensive statutory scheme under the Water Industry Act 1991 provided the exclusive remedy, precluding claims in common law nuisance.

Facts

Mr Marcic, the claimant, owned a property that was repeatedly flooded with foul and surface water from overloaded public sewers operated by Thames Water Utilities Ltd, the defendant. The sewers had become inadequate to serve the properties connected to them, particularly after periods of rain. Thames Water was aware of the flooding problems since at least 1992 but operated a points-based system to prioritise capital expenditure on sewer improvements. Under this system, Mr Marcic’s street did not rank high enough to justify the necessary works ahead of other, more pressing areas. Mr Marcic brought a claim for damages and an injunction against Thames Water in common law nuisance and under the Human Rights Act 1998 for breach of his rights under Article 8 of the ECHR (right to respect for private and family life) and Article 1 of the First Protocol (protection of property).

Issues

The principal legal issues before the House of Lords were:

1. Whether a statutory sewerage undertaker could be liable in common law nuisance for failing to improve its sewers, which had become inadequate due to increased use by lawful users, resulting in flooding to a claimant’s property.
2. Whether the statutory enforcement scheme established by the Water Industry Act 1991 (‘WIA 1991’) provided the exclusive remedy for such complaints, thereby ousting the jurisdiction of the courts to hear a common law claim in nuisance.
3. Whether the combination of the flooding and the absence of a common law remedy amounted to a violation of the claimant’s rights under the Human Rights Act 1998.

Judgment

The House of Lords unanimously allowed Thames Water’s appeal, overturning the Court of Appeal’s decision and restoring the trial judge’s dismissal of the claim. The leading speech was delivered by Lord Nicholls of Birkenhead.

The Common Law Nuisance Claim

Lord Nicholls held that a claim in nuisance could not succeed. He reasoned that the owner of land is generally not liable for a nuisance arising on their land which they did not create, unless they ‘adopt’ or ‘continue’ the nuisance. In this case, the ‘nuisance’ was the volume of water from third-party properties lawfully connected to the sewer. Thames Water had not created or adopted this state of affairs; it was simply the owner of the passive sewer network.

Crucially, Lord Nicholls determined that Parliament had created a specific and comprehensive statutory framework under the WIA 1991 to deal with the duties and failings of sewerage undertakers. Section 94 of the Act imposes a duty on undertakers to ‘effectually drain’ their area, and the enforcement of this duty is placed in the hands of the Director General of Water Services (the regulator). This scheme required the regulator to balance the interests of all customers and to approve a system of priorities for significant capital expenditure, which is precisely what Thames Water had done. Allowing an individual to sue in nuisance would disrupt this carefully balanced statutory scheme.

The statutory scheme for the provision of a sewerage system is a comprehensive and elaborately detailed scheme. And it is a scheme with its own system of enforcement. In the ordinary way a statutory scheme of that nature is not intended to be supplemented by an auxiliary common law remedy, available to a dissatisfied customer. A right to sue in nuisance would give an individual a priority which the statutory scheme denies him. It would subvert the scheme’s precept of fairness.

The Human Rights Act Claim

The House of Lords also dismissed the claim under the Human Rights Act 1998. It was accepted that the repeated flooding interfered with Mr Marcic’s rights under Article 8 and Article 1 of the First Protocol. However, the court had to determine whether this interference was justified and proportionate. Lord Nicholls concluded that the statutory scheme under the WIA 1991 itself struck a fair balance between the rights of individual property owners like Mr Marcic and the interests of the wider community. The scheme required the undertaker to balance competing demands on its finite resources in a rational way, subject to the oversight of the regulator. This legislative framework was deemed a proportionate means of achieving a legitimate aim and fell within the state’s margin of appreciation.

The crucial question is whether in striking this balance between the interests of the individual and the interests of the community as a whole the 1991 Act gives a fair margin of appreciation to the Director and the sewerage undertakers. In my view it does. The balance struck by the statutory scheme is not arbitrary or unreasonable. It is a scheme which, through the Director, enables a Sewerage undertaker’s improvement programme to be looked at as a whole.

Implications

The decision in Marcic is a landmark authority on the interface between common law rights and comprehensive statutory regulatory schemes. It establishes that where Parliament has enacted a detailed scheme for the performance of a public duty (such as providing sewerage) and has included a specific mechanism for enforcement (e.g., via a regulator), the courts will be very reluctant to allow a parallel common law claim. Such a claim would risk undermining the balance of public and private interests that the statutory scheme was designed to achieve. The case confirms that the existence of such a scheme can also provide a justification for an interference with ECHR rights, provided the scheme itself is fair and proportionate.

Verdict: The appeal by Thames Water Utilities Ltd was allowed. The House of Lords set aside the order of the Court of Appeal and restored the trial judge’s order dismissing Mr Marcic’s claim.

Source: Marcic v Thames Water Utilities Ltd [2003] UKHL 66