A recent decision of the Court of Appeal on water companies pumping sewage in to our waterways reinforces that most compensation claims arising from inadequacy of sewerage infrastructure have been ousted by statute.
There is much in the news on the effluent in our rivers and the pumping of sewage by water companies. Last year, there were more than 370,000 spillages in England alone: even this figure is based on self-reporting from the water companies and the true figure is therefore likely to be even higher. In The Manchester Ship Canal Company Ltd v United Utilities Water Ltd  EWCA Civ 852 (“United Utilities”) the Court of Appeal recently looked at the rights of consumers and others to sue for damages as a result.
There is often a tension between the rights which individuals enjoy under the judge-made common law and modern regulatory regimes put in place by statute. Those tensions will be particularly acute when the legislation puts in place a regulatory regime which appears incompatible with normal rights to claim damages from a wrongdoer. The regulatory regime is enforceable ultimately by government and often provides only administrative penalties which do not include compensation to individuals who suffer damage (which, in the case of sewage discharges, might include gastroenteritis suffered by swimmers).
The Court of Appeal’s judgment in United Utilities explores this tension, in the specific and very important context of sewerage regulation: the Court has found that no damages claim is available against a water company that discharges untreated sewage due only to the inadequacy of the infrastructure, on the basis those remedies would be incompatible with the regulatory regime contained in the Water Industry Act 1991 (“the statute”).
United Utilities regularly discharged untreated sewage into Manchester Ship Canal. It was undisputed that, at common law, this conduct would give rise to a damages claim. It was also undisputed that discharging untreated sewage was a breach of the statute. The issue was whether the common law remedies, such as damages, remained and were available despite the terms of the statute.
The first instance court decided, on the evidence, that the discharges occurred because of the inadequacy of the existing sewerage system’s capacity, particularly when that capacity was strained by sudden heavy rainfall. In other words, the cause of the discharge was a lack of investment in infrastructure. This was unfortunate for the canal company because an earlier decision called Marcic had found that “it would subvert [the statute’s] scheme to allow … common law claims … which, however framed, amounted to a complaint that the undertaker should have built more sewers”.
In both Marcic and United Utilities, the only cause of the discharge was the inadequacy of the infrastructure. Therefore MSC, like Marcic, could only be addressed under the regulatory regime, and not through claims by affected landowner.
The Court in both Marcic and MSC has left open the possibility that common law claims might persist for discharges caused not by “policy” or “capital expenditure” decisions (which includes investment in infrastructure) but rather “operational” or “current expenditure” issues. The line between these two concepts is notoriously difficult to draw but an “operational” discharge might be one caused by, for example, a deliberate discharge in breach of the law or the negligence of one or more employees of the water company and not attributable to any high-level failure to put in place sufficient infrastructure or make sufficient capital expenditure to prevent that discharge. Whatever the conceptual tenability of this distinction, obtaining evidence pointing to an “operational” decision leading to discharge is likely to be challenging.
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