Supreme Court gives green light to canal firm to claim against United Utilities

The UK’s final court of appeal has overruled an earlier High Court decision and judged that the Manchester Ship Canal Company can pursue its long-standing claim against United Utilities for the water company’s discharges of foul water into waterways owned by the canal owner.

The court emphasised that it was not judging whether the canal company would be successful were it to now pursue its claim. But law firms are predicting the decision will spark other similar bids to claim against sewerage operators.

The decision was the latest development of the canal company’s attempt to bring a claim against United Utilities. The Supreme Court allowed the canal company’s appeal following an earlier High Court declaration that the company could not make its claim on the grounds that it would be “inconsistent with and therefore barred by the statutory scheme for regulating sewerage established by the Water Industry Act 1991.” This was later upheld by the Court of Appeal.

But president of the Supreme Court, Lord Reed, and its vice president, Lord Hodge, with the agreement of the rest of the court, judged jointly that the 1991 Act does not prevent the canal company from bringing a claim “in nuisance or trespass when the canal is polluted by discharges of foul water from United Utilities’ outfalls, even if there has been no negligence or deliberate misconduct.”

The court said: “There is no suggestion that these polluting discharges are caused by negligence or deliberate wrongdoing on the part of United Utilities. However, they could be avoided if United Utilities invested in improved infrastructure and treatment processes.”

It went on to say the High Court judgments implied that “no owner of a canal (or other watercourse or body of water) can bring a claim based on nuisance or trespass against a sewerage undertaker in respect of polluting discharges into the water, unless the sewerage undertaker is guilty of negligence or deliberate wrongdoing. A claim of this kind would be prevented even if the polluting discharges were frequent and had significant and damaging effects on the owner’s commercial or other interests, or on its ability to enjoy its property.”

Commenting on the Supreme Court ruling, partner at law firm, Charles Russel Speechlys, Andrew Ross, said: “Owners of waterways may now consider taking action against sewerage undertakers for polluting water, and it is very possible that we could now see an increase in this type of legal claim.”

Ross added: “For those prepared to wait, the government’s Storm Overflows Reduction Plan published in August 2022 sets out targets for sewerage undertakers. Its overall aim is to reduce storm overflows completely save in periods of exceptionally heavy rainfall by 2050. The government and Ofwat will be able to enforce the reduction where water companies are not meeting their legal obligations”.

The Supreme Court offered some detail on the implications of the decision in the following statement:

“The 1991 Act does not expressly authorise United Utilities to cause a nuisance or to trespass by discharging foul water through the outfalls into the canal. United Utilities’ entitlement to use the outfalls derives from section 116 of the 1991 Act. However, this entitlement is subject to a number of statutory protections for watercourses. Section 117(5) provides that nothing in section 116 (or the other relevant sewerage provisions of the 1991 Act) authorises a sewerage undertaker to use a sewer, drain or outfall to convey foul water into a watercourse. Sewerage undertakers therefore do not have statutory authority to discharge untreated sewage into watercourses.

“Section 117(6) prevents a sewerage undertaker from carrying out its functions under the relevant sewerage provisions so as to create a nuisance. Section 94(4) makes it clear that the common law remedies for nuisance – such as an injunction or damages – are available in addition to any remedy available by virtue of section 94. Section 186(3) further protects the owners of watercourses, and other rights-holders, by stating that nothing in the relevant sewerage provisions authorises a sewerage undertaker to damage a watercourse, or the quality of the water in it, without consent.

“The polluting discharges similarly cannot be regarded as having been impliedly authorised by Parliament, since they are not an inevitable consequence of a sewerage undertaker’s performance of its statutory powers and duties. In the present case, the discharges could be avoided if United Utilities invested in improved infrastructure and treatment processes.”