The Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd (formerly General Motors UK Ltd)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Floyd,Lord Justice David Richards |
| Judgment Date | 17 May 2018 |
| Neutral Citation | [2018] EWCA Civ 1100 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2017/0278 & A3/2017/0291 |
| Date | 17 May 2018 |
[2018] EWCA Civ 1100
Lord Justice Lewison
Lord Justice Floyd
and
Lord Justice David Richards
Case No: A3/2017/0278 & A3/2017/0291
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
HIS HONOUR JUDGE BEHRENS SITTING AS A JUDGE OF THE HIGH COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Katharine Holland QC and Ms Galina Ward (instructed by Hill Dickinson LLP) for the Appellant
Mr William Norris QC, Mr Simon EdwardsandMr Daniel Stedman Jones (instructed by Duane Morris) for the Respondent
Hearing dates: 24 & 25 April 2018
Judgment Approved
Introduction
Vauxhall Motors Ltd own a substantial manufacturing plant at Ellesmere Port close to the Manchester Ship Canal. Under the terms of a Licence granted in 1962 by the Manchester Ship Canal Company Ltd (MSCC) they were entitled to discharge surface water and trade effluent into the Canal through a drainage system constructed by Vauxhall on MSCC's land under the terms of the licence. The Licence was granted in perpetuity in consideration of an annual payment of £50. It contained a provision entitling MSCC to terminate the Licence by notice if the annual payment remained in arrear after a warning notice had been given. It is now common ground that the Licence was terminated by notice on 10 March 2014. The current value of the right to discharge surface water and trade effluent is of the order of £300,000 to £440,000 per annum.
The issue on this appeal is whether HHJ Behrens was wrong to grant Vauxhall relief against forfeiture of the Licence, thus enabling them to continue to exercise the rights granted by the Licence at the contractual rate of £50 per annum. MSCC says he was; both because he had no jurisdiction to do so, and also because the application for relief was made too late.
Vauxhall also claim the right to discharge surface water independently of the Licence, by virtue of statutory rights granted to one of its predecessors in title by the Manchester Ship Canal Act 1885 which authorised the Canal to be built. The judge decided that the claimed rights did not encompass the current drainage system. Vauxhall say that he was wrong. That is the issue on the cross-appeal.
The facts
The judge's judgment is at [2016] EWHC 2960 (Ch). I can take the facts from his careful judgment. The judge began with a short history of the Manchester Ship Canal which, although fascinating, is not of direct relevance to the issues before us.
At the time when the Canal was under consideration one of its opponents was Mr Richard Naylor, a banker in Liverpool. He was the owner of the Hooton, Netherpool and Overpool Estates, upon which there was a country house known as Hooton Hall, a racecourse and a polo field. His land was riparian land, adjoining the River Mersey. The majority of the natural rainfall over the site would have been absorbed by the land entering the groundwater, with sporadic ponding during extreme storm events. A small proportion of rainfall over the site would have been converted to flow in the ditch network and stream which discharged directly into the River Mersey via the ravine at the north western corner of Booston Wood. This is the drainage channel with which we are concerned. A further drainage point of Mr Naylor's land was the Pool Hall Brook, which also flowed into the River Mersey. The construction of the Canal severed the physical connection between Mr Naylor's land and the river. Mr Naylor's land now abutted the Canal itself.
When the Canal was constructed, the water level was lower than the ground level at the end of the ravine and it would therefore have discharged directly to the Canal. The flow of water was not significant enough to warrant any special measures and ground water would have continued to flow towards the Mersey Estuary. The Canal would have intercepted any direct surface run-off from the strip of land adjoining. Furthermore, the drainage regime at the ravine did not change as a result of the Canal construction. The expert evidence was that annual flow from the ravine into the river at that time was approximately 100,000 cubic metres.
The only mitigating measure which was installed to deal specifically with the effects on drainage of surface water following the construction of the Canal was the construction of the Pool Hall Syphon, which was installed to allow the Pool Hall Brook to pass beneath the Manchester Ship Canal and to drain into the River Mersey. The central gully flowed directly into the Manchester Ship Canal at the ravine.
Over the years various developments took place over the land. In 1914, Hooton Hall was requisitioned by the War Office and became a training ground for one of the newly created Liverpool ‘Pals’ battalions and later a military hospital. The house itself was demolished in the 1920s or 1930s and the site was used as a military airfield until the War Office relinquished possession in 1957 (including a period from 1930 to 1933 when it was officially Liverpool Airport). Following a planning inquiry held in 1960 Vauxhall obtained permission to develop the land by erecting a large manufacturing plant and associated works.
The Licence
The purpose of the Licence was to enable Vauxhall to alter the arrangements for drainage both as regards surface rainwater and also trade effluent. As a result of negotiations that took place before the grant Vauxhall and MSCC had agreed a plan of the proposed works. The Licence is dated 12 October 1962. On its front cover it is described as a Licence in respect of a spillway at Ellesmere Port. It states the yearly rent is £50. The parties were Vauxhall and MSCC (described as “the Canal Company”). In each case the reference to each party was said to include “their successors and assigns where the context so requires”. There are 3 recitals. The first two recitals refer to the land owned by Vauxhall and MSCC. The first recital stated that MSCC was seised in fee simple of the “land hatched red on the plan hereto annexed [and] the land there coloured blue”. The third recital stated that the parties had agreed to execute the Licence:
“for the purpose of enabling Vauxhalls to discharge the surface water and trade effluent from their said land and industrial buildings and developments thereon contemplated by Vauxhalls into the Manchester Ship Canal”.
Clause 1 of the Licence contained the grant in the following terms:
“In consideration of the rent or annual sum hereinafter made payable and of the covenants on the part of Vauxhalls and the conditions hereinafter contained the Canal Company as BENEFICIAL OWNERS hereby GRANT unto Vauxhalls:
(i) Full right and liberty to discharge all surface water and trade effluent of a purity and quality to comply with the covenants hereinafter contained from the said land shown edged red on the said plan and all buildings now or hereafter to be erected thereon into the Manchester Ship Canal through and over the pipes and spillways next hereinafter mentioned
(ii) The right and liberty in accordance with detailed plans sections and specifications to be previously submitted to and approved in writing by the Chief Engineer for the time being of the Canal Company (hereinafter referred to as “the Engineer”) to lay construct maintain repair alter renew and use under and upon the said land shown hatched red on the plan annexed hereto and under the said land shown coloured blue on the said plan pipes of such dimensions and capacity as Vauxhalls may from time to time require and spillway works of such dimensions and capacity as the Canal Company may from time to time require for the purpose of effecting and controlling the said discharge of surface water and trade effluent which said pipes and spillways works and all works in connection therewith are hereinafter collectively referred to as “the Spillway”
(iii) The right and liberty for all or any of the purposes aforesaid to have access to the spillway with all necessary vehicles equipment and materials along the land coloured blue on the said plan or over the adjoining lands of the Canal Company by such other route as may be from time to time prescribed by the Engineer
To hold the said rights and liberties unto Vauxhalls from the twelfth day of October one thousand nine hundred and sixty two in perpetuity subject to the rent or annual sum hereinafter made payable and the covenants on the part of Vauxhalls and the conditions hereinafter contained”
It is to be noted that the defined expression “the Spillway” included all the infrastructure that Vauxhall were to construct. Both the land hatched red and the land coloured blue on the plan annexed to the Licence lay outside the boundary of Vauxhall's land, and formed part of land owned by MSCC.
Clause 2 contained the obligation to pay the £50 per annum:
“Vauxhalls shall during the continuance of this Licence pay to the Canal Company yearly and proportionately for any less period than a year the rent or sum of Fifty pounds on the twelfth day of October in every year the first of such payments to become due on the twelfth day of October one thousand nine hundred and sixty three”.
Clause 3 contained a number of covenants by Vauxhall. They included covenants:
i) To pay the said yearly rent or sum on the days and in manner aforesaid (Covenant (a))
ii) To lay and construct the spillway only in accordance with plans approved in writing by the Engineer and under his supervision and to his satisfaction. (Covenant (c))
iii) To maintain and keep the spillway in good repair and condition and when necessary to renew and replace the same in default of which it would be lawful for MSCC to effect the...
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