Manchester Ship Canal Company Ltd v United Utilities Water Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Sullivan,Lady Justice Arden |
| Judgment Date | 07 February 2013 |
| Neutral Citation | [2013] EWCA Civ 40 |
| Docket Number | Case No: A3/2012/0743 & 0744 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 February 2013 |
[2013] EWCA Civ 40
Lady Justice Arden
Lord Justice Sullivan
and
Lord Justice Patten
Case No: A3/2012/0743 & 0744
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
Newey J
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Robert McCracken QC & Miss Rebecca Clutten (instructed by Bircham Dyson Bell LLP) for the Appellants
Mr Jonathan Karas QC, Mr Julian Greenhill & Mr James McCreath (instructed by Pinsent Masons LLP) for the Respondent
Hearing dates : 9-11 October 2012
THIS APPEAL IN A NUTSHELL
Sewerage undertakers are bodies that have the statutory function of draining land and of maintaining and emptying public sewers. This appeal is concerned with limited but important aspects of one power of sewerage undertakers, the implied power to discharge the contents of those sewers ("sewer contents") on to third party property without the owner's consent ("the implied right of discharge"). This court held that that right was implied in the statutory framework governing sewerage undertakers in 1897. The central question on this appeal is this: was this right, as Newey J held, permanently saved from repeal in 1989 or 1991, as respects outfalls from sewers in place in 1989, because it was transferred under statutory transfer schemes for the transfer of property, rights and liabilities from the then sewerage undertakers to successor companies in preparation for privatisation in 1989?
In earlier litigation, this court held that the implied right of discharge was repealed by the Water Industry Act 1991 ("the WIA 1991") or alternatively the Water Act 1989 ("the WA 1989"): British Waterways Board v Severn Trent Water Ltd [2002] Ch 25 ("BWB"), reversing a decision of my own at trial ( [2001] Ch 32). In BWB, which I shall consider further below, this court distinguished the decision of this court in Durrant v Branksome Urban District Council [1897] 2 Ch 291. In that case, this court held that sewerage undertakers had the implied right of discharge by implication into the then statutory framework, the Public Health Act 1875 ("the PHA 1875"). That Act was replaced by the Public Health Act 1936 ("the PHA 1936"), but Parliament did not then, or on any other occasion, confer an express power of discharge on sewerage undertakers, nor did it expressly repeal any implied right of discharge.
According to the decision of this court in BWB, the implied power of discharge ceased to exist either as a result of the WA 1989 or the WIA 1991. The Appellate Committee of the House of Lords refused permission to appeal against that decision. In determining this appeal, there is no question of this court coming to any different conclusion from that expressed in BWB on the points there decided. Its ratio is binding on this court. However, the respondent has reserved the right to challenge BWB before the Supreme Court should this matter go further, just as the appellants have reserved the right to consider whether to challenge Durrant in that event.
Under the WA 1989, provision was made for sewerage services to be privatised: the method chosen involved a transfer scheme taking effect on the transfer date which was simultaneously the date on which the relevant provisions of the WA 1989 came into effect. This means that, if the implied right was repealed by the WA 1989, the repeal and the transfer scheme were simultaneous. This appeal will have to consider the implications of that fact.
In this litigation, the respondent sewerage undertaker seeks to restrict the effect of BWB by arguing that, where the outfall belonged to the sewerage undertaker on the commencement date of the WA 1989, the right to discharge sewer contents from that outfall on to third party land (including land covered by water, such as rivers and canals) on and after that date was transferred to a successor company by a statutory transfer scheme under the WA 1989, and has been preserved by legislation from any repeal. The outfalls in question are into canals owned by the appellants.
Newey J, in a thoughtful judgment, concluded that, where outfalls were transferred to a sewerage undertaker under a transfer scheme entered into as part of the privatisation process implemented under the WA 1989, the sewerage undertaker acquired the implied right of discharge from that outfall that existed prior to the WA 1989. As I have said, this appeal is against that decision.
Although this appeal involves consideration of some complex statutory provisions and case law, at the end of the day the correctness of the judge's decision must stand or fall by reference to two propositions ("the Propositions"). The first proposition ("the First Proposition") is that the implied right of discharge passed to the successor company under the transfer scheme. The judge's fundamental point was that the transfer scheme had by statute the effect of transferring the implied right of discharge to the successor company. The second proposition ("the Second Proposition") is that the implied right of discharge so transferred was preserved by subsequent legislation from subsequent change. Both propositions had to be established.
Having considered the well-presented submissions of counsel, and the various authorities to which we were referred, I have concluded for the reasons set out below that this court cannot consistently with BWB uphold the Propositions:
i) Even if the implied right of discharge fell within the transfer scheme, the latter did no more than convey rights subject to amendment by statute.
ii) The transfer scheme was ineffective to freeze the position as it stood immediately at the date of the transfer scheme.
iii) Since in BWB this court held that the statutory provisions currently in force are inconsistent with the implied right of discharge formerly conferred on sewerage undertakers, it was not, in my judgment, open to the judge to hold as he did that BWB was distinguishable on the ground that the Propositions had not been argued in that case.
This judgment proceeds on the basis that both Durrant and BWB are good law as both decisions are binding on this court. That means that at some point one statutory framework was superseded by another. Whenever that happens, important questions arise as to which activities are governed by which framework, and as to the survival of the earlier legislation. I shall need to consider those points below since they shed some light on the answer to the questions of interpretation posed in this case.
BACKGROUND
There are four matters to be dealt with before I set out my own reasoning:
(A) The relevant statutory provisions need to be outlined, and the decisions of this court in Durrant and BWB placed in context;
(B) The factual background;
(C) The effect in general of the supercession of one statutory framework by another; and
(D) The judge's reasoning on the First Proposition.
I will deal with the judge's reasoning on the Second Proposition when I come to set out my own reasoning, as it can be more clearly explained at that stage (see paragraphs 68 to 80 of this judgment).
The application before the judge was one for summary judgment, but neither party to this appeal suggests that anything turns on that point. The question in issue is a pure point of law, and it was sensible to decide it before the costs of a substantial trial were incurred. It was decided in the same way as a preliminary issue of law.
(A) OUTLINE OF THE RELEVANT STATUTORY PROVISIONS AND THIS COURT'S DECISIONS IN DURRANT ANDBWB
These provisions form the background against which the statutory effect of the transfer scheme must be ascertained.
Sewerage services have been regulated by statute since at least 1875. The legislation relevant to this appeal is contained in: the PHA 1875 and the PHA 1936 (collectively "the PHAs"), the Water Act 1973 ("the WA 1973"), the WA 1989 (which facilitated privatisation of the water industry), the WIA 1991, a consolidating Act, which, so far as material, is currently in force, and the Water Consolidation (Consequential Provisions) Act 1991 ("the CPA 1991"), which dealt with transitional provisions more conveniently enacted outside the WIA 1991.
The material required to be covered in this section of my judgment is organised under the following headings:
(a) Basic statutory framework: sewerage undertaker's functions, together with the power to lay pipes, the prohibition against discharging foul water ("the foul water proviso") and the obligation to pay compensation;
(b) this court's decision in Durrant, upholding the implied right of discharge;
(c) this court's decision in BWB, holding that the implied right of discharge had been repealed;
(d) the provisions in the WA 1989 dealing with transfer schemes and the transfer of statutory rights and liabilities; and
(e) transitional provisions and savings in the 1989 and 1991 legislation.
There will, I regret, be a lengthy narrative before I reach (at paragraphs 28 to 31 below) the transfer scheme provisions, and (at paragraphs 32 to 34) the transitional provisions and savings, which are at the heart of this appeal.
(a) Basic statutory framework: sewerage undertaker's functions + pipe-laying power + foul water proviso + compensation
The basic statutory framework set out in the PHA 1875 can still be seen in the current legislation. In the PHA 1875, there were...
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