The Manchester Ship Canal Company Ltd & Anor v United Utilities Water Plc [2014] UKSC 40

Sewerage undertakers discharged surface water and treated effluent into canals owned by Manchester Ship Canal Company without consent. The Supreme Court held there is no general statutory right of discharge into private watercourses, but an implied right exists for outfalls already in use before 1 December 1991.

Facts

The Manchester Ship Canal Company Ltd and another canal owner brought proceedings against United Utilities Water Plc, a sewerage undertaker under the Water Industry Act 1991. The dispute concerned whether United Utilities had a statutory right to discharge surface water and treated effluent from its public sewers into the claimants’ privately owned canals without their consent. Such discharge into private watercourses would ordinarily constitute a trespass unless statutorily authorised. It was common ground that the Water Industry Act 1991 contains no express right of discharge; the question was whether such a right could be implied.

Historically, under the Public Health Acts 1875 and 1936, local authorities (and later regional water authorities) were held in Durrant v Branksome Urban District Council [1897] 2 Ch 291 to enjoy an implied right of discharge derived principally from section 17 of the 1875 Act (re-enacted as section 30 of the 1936 Act), which restricted discharge of foul water and thereby impliedly recognised a right to discharge treated effluent and surface water. Following privatisation under the Water Act 1989, sewerage functions were transferred to private undertakers. The Water Industry Act 1991 and the Water Consolidation (Consequential Provisions) Act 1991 restated the statutory scheme and repealed section 30 of the 1936 Act.

Issues

The Supreme Court had to decide two questions:

1. Whether sewerage undertakers enjoy a general implied statutory right under the Water Industry Act 1991 to discharge surface water and treated effluent into private watercourses, including from new outfalls created after the Act came into force.
2. If not, whether an implied right survives in relation to outfalls that were already in use when the 1991 Act came into force on 1 December 1991.

Arguments

Appellant (United Utilities)

United Utilities argued that a general right of discharge should be implied from section 159 of the 1991 Act (power to lay pipes across private land) read with section 94 (duty to drain the area effectually). It relied on the historical position under the Public Health Acts and the necessity of discharge to the performance of statutory functions.

Respondents (Canal Owners)

The canal owners argued that the 1991 Act constitutes a self-contained scheme, that no such right could be implied, and that any required rights of discharge must be obtained by agreement or compulsory purchase. They contended that discharges without consent constituted trespass.

Judgment

The general right argument

The Court unanimously rejected the appellant’s primary argument. Lord Sumption endorsed the reasoning of the Court of Appeal in British Waterways Board v Severn Trent Water Ltd [2002] Ch 25, holding that section 159 only authorises the laying of pipes and cannot found an implication as to where those pipes may discharge. Importantly, if the right derived from section 159, it would not be qualified by the section 117(5) protection against foul water discharge, which does not apply to section 159. Moreover, the compensation provisions in Schedule 12, paragraph 2 do not extend to damage from discharges, and section 165 conferred an express discharge power on water undertakers only, suggesting the omission for sewerage undertakers was deliberate. Discharge was not necessary to the performance of statutory duties because undertakers could discharge to the sea, rivers, their own land, or by agreement or compulsory purchase.

The pre-existing outfalls argument

The Court held, however, that a more limited right must be implied in respect of outfalls already in use on 1 December 1991. Lord Sumption reasoned that the statutory duties in section 94 (effectual drainage), section 106 (right of property owners to connect) and, crucially, section 116 (prohibition on discontinuing use of a sewer without providing an equally effective alternative) are incompatible with the sudden cessation of lawful discharge from existing outfalls. To hold otherwise would render the statutory scheme legally incoherent and require sewerage undertakers to commit tortious discharges immediately upon the Act’s commencement or block outfalls contrary to section 116. The implied right of discharge from existing outfalls therefore derives from section 116 read against the background of the general duties.

Lord Toulson agreed, holding that section 116, read with sections 106(1) and 117(5) and (6), impliedly empowers continued use of pre-existing public sewers vested in the undertaker, subject to the prohibition on discharging untreated foul water and the obligation not to cause nuisance.

Lord Neuberger reached the same result but placed greater weight on the earlier legislation and the Interpretation Act 1978. He considered that under the 1989 Act, sewerage undertakers had already acquired the right of discharge from existing outfalls, either through the continued application of section 30 of the 1936 Act (as reasoned in Durrant) or as vested “property, rights and liabilities” transferred under section 4 and Schedule 2. Section 16(1)(c) of the Interpretation Act 1978 preserved those accrued rights notwithstanding the repeal of section 30 by the 1991 Consolidation Act, particularly given that the repeals were expressly stated to be without prejudice to section 16 of the 1978 Act.

Compensation and protection

The Court noted that section 116 is one of the “relevant sewerage provisions” defined in section 219(1), so Schedule 12, paragraph 4 confers a right to full compensation for damage caused by the exercise of that power. The section 117(5) protection against foul water discharge and section 186(3) protection against injurious affection also apply.

Implications

The decision confirms that sewerage undertakers under the Water Industry Act 1991 have no general implied statutory right to discharge into private watercourses. New outfalls created after 1 December 1991 require the consent of the landowner, obtained by agreement or compulsory purchase, subject to appropriate compensation. However, discharges may lawfully continue from outfalls already in use on that date, subject to the statutory protections against foul water discharge and nuisance, and subject to a right to full compensation for damage under Schedule 12, paragraph 4.

The judgment is significant for the water industry, canal and river owners, and land owners. It preserves the operational continuity of the privatised sewerage system without conferring an open-ended entitlement to interfere with private property rights. The Court reaffirmed the restrictive test for implying statutory rights to commit what would otherwise be torts: the implication must be necessary, not merely convenient. The decision also illustrates the caution required when interpreting consolidating legislation, particularly where necessary implications must be drawn to avoid legal incoherence. The Court expressly noted that its conclusion does not affect any binding agreements between undertakers and watercourse owners regulating particular outfalls. A residual anomaly remains: the right to continue discharging from pre-1991 outfalls persists indefinitely, but this is inherent in the nature of the statutory transition.

Verdict: Appeal allowed to a limited extent. The Supreme Court declared that, subject to section 117(5) of the Water Industry Act 1991, United Utilities is entitled to discharge into the respondents’ canals from any sewer outfall which was in use on or before 1 December 1991, but has no general right to discharge from outfalls created after that date.

Source: The Manchester Ship Canal Company Ltd & Anor v United Utilities Water Plc [2014] UKSC 40