The Manchester Ship Canal Company Ltd v United Utilities Water Ltd [2016] EWHC 259 (Ch)

“8. Since the Canal was constructed and at all material times until 1 September 1991, the Defendant’s respective predecessors in title and the Defendant have had statutory authorisation under the Public Health Acts 1875 and 1936 to discharge water into the Canal so long as the water discharged did not prejudicially affect the purity and quality of the water in the Canal. 9. Since 1 September 1991 the statutory scheme governing sewerage undertakers has been contained in the Water Industry Act 1991. In British Waterways Board v Severn Trent Water Ltd [2001] Ch 31, the Court of Appeal held that a sewerage undertaker, such as the Defendant, does not have statutory power to discharge water or other matter from its drainage pipes onto the land or into the waters of others. Accordingly, any discharge now made by a sewerage undertaker without the permission of a relevant land owner constitutes a trespass.”

“However, in the case of each of the other discharges listed in the attached Schedules, the Defendant does not have the benefit of any express or implied agreement, or any statutory right, nor any common law right, entitling or authorising it to make such discharge into the Canal or drain into the Canal. Some discharges in particular locations may be the subject of statutory authorisation under sections 63-126 of the [Manchester Ship Canal Act 1885], but the Defendant is put to strict proof that any of its discharges benefit from such authorisation. Each of the individual discharges listed in the attached Schedules is unlawful and constitutes a trespass actionable by the Claimant.”

“6. In the course of submissions, [counsel then appearing for the claimants] accepted that the parties had had an adequate opportunity to address the issue that United Utilities asks me to decide. Further, he did not suggest that I lacked any relevant evidence. The thrust of his submissions was rather to the effect that I should refuse to decide the ‘short point of law’ for reasons of case management, having regard to the overriding objective. He observed that the losing party would be very likely to challenge any decision I might arrive at. This, he said, could be expected to create practical problems given that the point of law does not affect all the outfalls in dispute and so cannot render a trial unnecessary. 7. Against that, the point that United Utilities wishes to have determined potentially affects some 106 of the 113 outfalls at issue in the Manchester Ship Canal case. A ruling on the point could thus have a substantial bearing on the length of a trial currently listed for 44 days. The point could also, I gather, be relevant to a majority of the outfalls in dispute in the Bridgewater … Canal case. In any event, I have now heard argument, over two days, on the legal question. That hearing would be wasted if I refused to rule on it.”

“52. In all the circumstances, I have concluded that the 1991 water legislation did not affect United Utilities’ entitlement to discharge water via outfalls dating from before 1 September 1989. United Utilities continued to enjoy the rights of discharge which their predecessors had had up to 1989. 53. This result seems to me to make sense. Were the Canal Companies’ submissions correct, United Utilities’ use of pre-existing outfalls would suddenly have become unlawful. I agree with Mr Karas that Parliament is most unlikely to have intended that. There is, furthermore, no clear indication that it did. On the Canal Companies’ case, use of the outfalls became unlawful by virtue of the 1991 legislation, but that legislation was intended to consolidate the law except as to the Law Commission’s recommendations [in its ‘Report on the Consolidation of the Legislation Relating to Water’ (Cmnd. 1483, April 1991)], and no one suggests that the Law Commission recommended the removal of sewerage undertakers’ ability to discharge from pre-existing outfalls. Further, there is a sound basis for distinguishing between new and old sewers. The British Waterways Board decision means that sewerage undertakers have no right to discharge from new sewers without the consent of affected landowners. It is quite another matter to say that sewerage undertakers must stop discharging from existing outfalls unless landowners consent. [Counsel for MSCC] suggested that the successors to water authorities had effectively been given a couple of years in which to sort out the position in relation to discharges, but nothing I have been shown demonstrates that that was how matters were seen at the time. On the face of it, there was no indication that the 1991 legislation would deprive sewerage undertakers of the (doubtless very valuable) powers of discharge which they had previously enjoyed, both before and after the Water Act 1989.”

“United Utilities asks me not only to grant declaratory relief reflecting the conclusions I have arrived at, but to dismiss the claim in respect of many of the outfalls into the Manchester Ship Canal. So far as the latter is concerned, United Utilities has adduced evidence that 106 of the relevant outfalls had been laid by 31 August 1989, and nothing I have seen casts any doubt on that. On the face of it, therefore, it is appropriate to dismiss the claim so far as it relates to these outfalls. Looking at the pleadings, however, it seems possible that the point on which I express a provisional view in paragraph 50 above might be argued to have a bearing on what I should do. If either party takes that view, I shall hear further submissions on that aspect.”

“The licence pursuant to which the defendant and its predecessor had been discharging could be brought to an end on six months’ notice. While the point has not been the subject of argument, my provisional view is that any ‘right’ to discharge which the defendant or its predecessor might have derived from pre-1991 legislation will not have endured beyond the licence.”

“Upon the true construction of the Water Act 1989, the Water Industry Act 1991, the Water Consolidation (Consequential Provisions) Act 1991, and/or the Transfer Scheme of the North West Water Authority (‘the Transfer Scheme’): (a) where the North West Water Authority as sewerage undertaker was entitled pursuant to the Public Health Acts 1875 and/or 1936 to discharge water and/or other matter into the Manchester Ship Canal (‘the Canal’) immediately prior to 1 September 1989 the Defendant continued after that date, including after 1 December 1991, to be entitled so to discharge water and/or other matter into the Canal; and/or (b) where the Defendant as sewerage undertaker was entitled pursuant to the Public Health Act 1936 to discharge water and/or other matter into the Canal immediately prior to 1 December 1991, the Defendant continued after that date to be entitled so to discharge water and/or other matter into the Canal”

“I would accordingly allow the appeal to the extent of declaring that subject to section 117(5) of the Water Industry Act 1991, the Appellants are entitled to discharge into the Respondents’ canals from any sewer outfall which was in use on or before 1 December 1991. For the avoidance of doubt, I should make it clear that this in no way affects any binding agreement under which the parties may have regulated for themselves the use of particular outfalls. We were informed that there may be such agreements with some proprietors, but we have not been concerned with them. I would leave the precise form of the declaration to be agreed between counsel.”

“18. Under the Water Industry Act [1991], the statutory duties of a sewerage undertaker include a duty to operate the system of public sewers so as effectually to drain their area (section 94) and a duty to allow the owners or occupiers of premises to connect to the public sewer system (section 106). Moreover, the undertaker is not permitted to discontinue the use of a sewer until it has provided an alternative sewer capable of serving as effectually (section 116). The result, if the right to discharge into private watercourses ceases as the canal owners suggest, is to make it impossible for the sewerage undertakers lawfully to perform their statutory functions or observe the statutory restrictions on the discontinuance of existing sewers from the moment that the new Act comes into force. This state of affairs will continue thereafter for a considerable period while the existing sewerage system is partially redesigned and rebuilt or the necessary easements are acquired by negotiation or compulsory purchase. When pressed to say how a sewerage undertaker was to comply with this view of the law immediately after 1 December 1991, the canal owners had no answer except that the law would not in practice be enforced by injunction but that if it was they must block the outfalls and allow surface water and treated effluent to backwash through the system into the streets. In fact, section 116 of the Act would rule out even that possibility. This is not just a practically inconvenient way of dealing with an issue which engages an important public interest. It is legally incoherent. Without the clearest possible indication that Parliament intended such a preposterous result, I decline to accept that it is the effect of the current legislative scheme. 19. In my opinion, when the Water Industry Act 1991 (i) imposed on the privatised sewerage undertakers duties which it could perform only by continuing for a substantial period to discharge from existing outfalls into private watercourses, (ii) at the same time applied to them the statutory restrictions in section 116 on discontinuing the use of existing sewers, it implicitly authorised the continued use of existing sewers. A restriction on discontinuing the use of an existing sewer until an alternative has been constructed is not consistent with an obligation to discontinue its use forthwith under the law of tort. The inescapable inference is that although there is no provision of the Act of 1991 from which a general right of discharge into private watercourses can be implied, those rights of discharge which had already accrued in relation to existing outfalls under previous statutory regimes survived. 20. The basis of this implication is not section 30 of the Public Health Act 1936, whose statutory predecessor was the basis of the decision in [Durrant v Branksome UDC [1897] 2 Ch 291], but section 116 of the 1991 Act viewed against the background of the general duties of sewerage undertakers under the Act. It follows that the repeal of section 30 by the Water Consolidation (Consequential Provisions) Act 1991 is irrelevant. In any event, its repeal would not affect rights of discharge which had already accrued by virtue of the use of existing outfalls: see section 16(1)(c) of the Interpretation Act 1978. 21. It is true that although over a period of time after the coming into force of the Water Industry Act new rights of discharge could have been acquired by negotiation or compulsory purchase or existing sewers or outfalls replaced, the effect of the conclusion which I have reached is that a sewerage undertaker is entitled under the Water Industry Act 1991 to continue discharging into private watercourses from existing outfalls indefinitely. The solution is therefore more extensive than the problem. But that is a lesser anomaly and one which is inherent in the nature of the issue. Once one concludes that because of the time required to do these things after the law was changed, the right of discharge for existing outfalls must survive, it is not possible to arrive by a process of construction at a positive obligation to address the issue after transfer in a different way by acquiring new easements or replacing sewers or outfalls.”

“In these circumstances, it appears to me to follow that sewerage undertakers had, and therefore continue to have, a statutory right to discharge surface water and treated effluent from existing outfalls from sewers which had been vested in them by the time that the 1991 Act came into force, but not from subsequently created outfalls or outfalls from sewers which they may have laid after that date.”

“The Orders of the Court of Appeal made on 7 February 2013 and sealed on 12 February 2013 be set aside save that paragraph 1 only of each of the Orders made by Mr Justice Newey on 8 March 2012 and sealed on 28 March 2012 be restored.”

“As setting aside the CoA order seems to restore Newey J’s order it is made explicit in the order that para 1 only of each of Newey J’s orders is to be restored. Lord Sumption’s view is that as the Court heard no argument about specific outfalls it should say nothing about his paragraph 2. It follows from that that the costs of the claims and counterclaims fall to be dealt with by Newey J in due course.”

“Drawing these authorities together, the relevant principles can be stated simply as follows: a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted; b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission; c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept; d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done; e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation; f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay; g) a much stricter view is taken nowadays of non-compliance with the CPR and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.”

“33 I consider that the judge was entitled to approach the relevance of lateness in this way. Lateness is not an absolute but a relative concept. As [counsel for a respondent] put it, a tightly focussed, properly explained and fully particularised short amendment in August may not be too late, whereas a lengthy, ill-defined, unfocussed and unexplained amendment proffered in the previous March may be too late. It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done. A fair reading of the judgment as a whole shows that this is how the judge took lateness into account. When dealing with specific matters sought to be introduced he never said merely that it was ‘too late’ but rather that the manner of pleading it, or the lack of satisfactory explanation for it not having been pleaded earlier meant that it was being introduced at too late a stage …. 34 Lateness, used in this way, is a factor of almost infinitely variable weight, when striking the necessary balance in determining whether or not to permit amendments.”

“Thus one can see the Court of Appeal struggling to reconcile the apparent statement of principle in the Barrell case [1973] 1 WLR 19, coupled with the very proper desire to discourage the parties from applying for the judge to reconsider, with the desire to do justice in the particular circumstances of the case. This court is not bound by the Barrell case or by any of the previous cases to hold that there is any such limitation upon the acknowledged jurisdiction of the judge to revisit his own decision at any time up until his resulting order is perfected. I would agree with Clarke LJ in Stewart v Engel [2000] 1 WLR 2268, 2282 that his overriding objective must be to deal with the case justly. A relevant factor must be whether any party has acted upon the decision to his detriment, especially in a case where it is expected that they may do so before the order is formally drawn up. On the other hand, in In re Blenheim Leisure (Restaurants) Ltd, Neuberger J gave some examples of cases where it might be just to revisit the earlier decision. But these are only examples. A carefully considered change of mind can be sufficient. Every case is going to depend upon its particular circumstances.”

“The instant application related to a decision in an interlocutory matter. Even in relation to an interlocutory judgment in which the order had not been drawn up, it seemed to his Lordship undesirable for a court to be asked to reconsider an earlier decision unless there were strong reasons for doing so. His Lordship said that those strong reasons included: a plain mistake on the part of the court; a failure of the parties to draw to the court’s attention a fact or point of law that was plainly relevant; or discovery of new facts subsequent to the judgment being given. Another good reason was if the applicant could argue that he was taken by surprise by a particular application from which the court ruled adversely to him and that he did not have a fair opportunity to consider.”

“This issue raises the question whether the judge misdirected himself in principle in the exercise of his discretion in reopening his previous order on the facts of the present case and, if so, whether this court should exercise its discretion by declining to reopen it and refusing the plaintiff permission to amend her pleading. As I indicated above, it is my view that this question depends upon the application of the overriding principle to all the circumstances of the case. I agree with Sir Christopher Slade that [counsel for the defendants’] submission that it makes no difference to the exercise of that discretion whether the application was made before or after the judge orally announced his order to dismiss the action cannot be accepted. The fact that it was made after and not before he did so is to my mind an important factor in deciding whether to grant permission. On the other hand, I respectfully differ from the suggestion that this court is bound by In re Barrell Enterprises [1973] 1 W.L.R. 19 to hold that permission to amend should only be granted in exceptional circumstances where the application is made after the order is announced orally but has not been drawn up and sealed. In deciding how to apply the overriding objective that factor is simply one consideration to be taken into account, albeit an imperative one. I am therefore unable to agree that we have to look to see whether in November 1999 there existed exceptional circumstances sufficient to justify the judge in exercising ‘the Barrell jurisdiction’.”

“would be required to undertake very substantial investigations into facts which it has not had to investigate as a result of any of the allegations raised in these proceedings to date, including without limitation as to the date of construction of sewers and properties which ultimately connect to sewers discharging through the outfalls in issue, as to the frequency and extent with which individual discharges can be said to have exceeded the statutory limits on [United Utilities’] authority to discharge, and as to its tankering operations.”

“Even if proper particulars are provided, I understand from [United Utilities] that, at present, there is no obviously satisfactory way of establishing which sewers connecting into sewers discharging into the Canal were constructed after that date. If this amendment were to be permitted, it is at this stage unclear to [United Utilities] precisely what factual investigations would be best undertaken. However, whatever method was chosen, given the sheer amount of infrastructure in issue, it is clear that a very significant amount of investigation would be necessary, and [United Utilities] would request an initial period of 6 months to respond following the provision of proper particulars, although anticipates that a request for a further extension is likely to be necessary.”

“Nothing in sections 102 to 109 above or in sections 111 to 116 above shall be construed as authorising a sewerage undertaker to construct or use any public or other sewer, or any drain or outfall— (a) in contravention of any applicable provision of the Water Resources Act 1991 or the Environmental Permitting (England and Wales) Regulations 2010 (S.I. 2010/675); or (b) for the purpose of conveying foul water into any natural or artificial stream, watercourse, canal, pond or lake, without the water having been so treated as not to affect prejudicially the purity and quality of the water in the stream, watercourse, canal, pond or lake.”

“Nothing in the relevant sewerage provisions shall authorise a sewerage undertaker injuriously to affect— (a) any reservoir, canal, watercourse, river or stream, or any feeder thereof; or (b) the supply, quality or fall of water contained in, or in any feeder of, any reservoir, canal, watercourse, river or stream, without the consent of any person who would, apart from this Act, have been entitled by law to prevent, or be relieved against, the injurious affection of, or of the supply, quality or fall of water contained in, that reservoir, canal, watercourse, river, stream or feeder.”

“MSCC tries to introduce new claims for damages by amendment outside the relevant limitation period. Even if amendments might otherwise be permitted (which they should not) MSCC should not be permitted to amend its Re-Amended Particulars of Claim so as to recover damages in respect of Category A, B or C trespass for any period in excess of 6 years prior to the date of this amendment.”

“In any event, the amendments create claims where previously there were none on the pleadings. This is clearly a case where limitation must preclude pre-March 2010 claims.”

“Now the questions become, ‘are these discharges in whole or in part of a particular nature or quality viz. originating from new connections (Category A)?’ ‘do they include foul or partly foul water (Category B)?’ ‘do they originate in tankered waste arriving at a WwTW by road (Category C)?’ Understood in this way, it is clear that new claims are made and the amendments should be refused.”

“If I can take you to paragraphs 75 to 76 of the skeleton argument, which is really the way we put it. We say … there is no real doubt that the new categories A, B and C are each new claims because they don't arise out of substantially the same facts as those already pleaded. Each of these categories will necessarily depend on new facts which weren't previously pleaded, weren't relied upon by [MSCC] and indeed weren't material to the claim as currently put in its re-amended particulars…. I think the point we make is at the end of paragraph 76. Previously the question for the court and the factual investigation was simply ‘Are the discharges from each outfall the responsibility of United Utilities and if so is there anything that authorises the use of that outfall?’ Now that goes, they have deleted paragraph 9, they now have to answer the following questions, we need to undertake the following factual allegations. In relation to category A ‘Are the discharges in whole or part of a particular nature or quality, in other words originating from new connections?’ They need to establish where that water comes from in order to show that it's a trespass, that essentially must be part of their case. If they don't establish that, there's no trespass. The next question is ‘Does it include foul or partly foul water’ -- in fact they need to show more than that, they need to establish … is there prejudice to their canal? … That's a new factual investigation. And thirdly, in relation to category C, they need to establish a completely new fact: ‘where did the waste come from, was it tankered in?’ These are entirely new facts and without proof of those, the onus being on the claimant, they cannot have a cause of action. These are new claims.”