The Manchester Ship Canal Company Ltd v United Utilities Water Ltd (No 2) [2024] UKSC 22

The Canal Company owns the Manchester Ship Canal, into which United Utilities discharges foul water from its sewerage system. The Supreme Court held that owners of watercourses can bring common law claims in nuisance or trespass against sewerage undertakers for polluting discharges, as such discharges are not authorised by the Water Industry Act 1991.

Facts

The Manchester Ship Canal Company Ltd (‘the Canal Company’) owns the beds and banks of the Manchester Ship Canal. United Utilities Water Ltd (‘United Utilities’), the sewerage undertaker for the North West of England, operates a sewerage network with approximately 100 outfalls discharging into the canal. When the sewerage system’s hydraulic capacity is exceeded, foul water is discharged into the canal through these outfalls as designed. The Canal Company sought to bring actions in nuisance and trespass against United Utilities for these polluting discharges.

Background

United Utilities sought a declaration that the Canal Company had no right of action in trespass or nuisance absent allegations of negligence or deliberate wrongdoing. The courts below granted this declaration, relying on the decision in Marcic v Thames Water Utilities Ltd [2003] UKHL 66. The Canal Company appealed to the Supreme Court.

Issues

The central issue was whether owners of watercourses can bring actions in nuisance or trespass against sewerage undertakers for polluting discharges of foul water, or whether such actions are barred by the Water Industry Act 1991 (‘the 1991 Act’).

Judgment

The Supreme Court unanimously allowed the appeal. Lord Reed and Lord Hodge delivered the joint leading judgment, with which all other Justices agreed.

Statutory Interpretation

The Court examined the 1991 Act in detail, noting that sections 117(5) and 186(3) expressly exclude authority to discharge untreated foul water into watercourses without consent. Section 18(8) expressly preserves common law remedies available independently of statutory contraventions.

“The only ouster, by section 18(8), is of causes of action of which a contravention of a condition of an undertaker’s appointment or licence, or of a statutory or other requirement enforceable under that section, forms an essential ingredient.”

Distinguishing Marcic

The Court held that Marcic was distinguishable. In that case, Thames Water had not created or adopted the nuisance; liability was alleged on the basis of failing to construct new sewers. An essential ingredient of that claim was breach of the statutory duty under section 94(1). Here, United Utilities deliberately designed its system to discharge foul water when capacity was exceeded:

“United Utilities is responsible for discharges of noxious effluent into watercourses from its sewers, sewage treatment works and associated works which occur as a result of its sewerage system operating as it is designed to do when its hydraulic capacity is exceeded.”

Remedies

The Court acknowledged that injunctions requiring infrastructure upgrades might conflict with the regulatory regime for capital expenditure. However, this did not exclude causes of action or awards of damages:

“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.”

Implications

This decision has significant implications for environmental protection and property rights. It confirms that sewerage undertakers cannot externalize the costs of inadequate infrastructure onto property owners by polluting watercourses without consequence. Owners of watercourses retain common law remedies for pollution, even where the underlying cause is inadequate sewerage infrastructure. While injunctive relief may be constrained by the regulatory framework, damages remain available to compensate for ongoing harm. The decision reinforces the principle of legality: fundamental property rights cannot be abrogated by statute without express language or necessary implication.

Verdict: Appeal allowed. The Canal Company may bring actions in nuisance or trespass against United Utilities in respect of polluting discharges of foul water into the canal, without needing to allege negligence or deliberate wrongdoing.

Source: The Manchester Ship Canal Company Ltd v United Utilities Water Ltd (No 2) [2024] UKSC 22