Environment – Sewerage – Discharge – Secretary of state confirming compulsory purchase order without including “discharge proviso” proposed by appellant canal owner – Court dismissing appellant’s challenge to decision pursuant to section 23 of Acquisition of Land Act 1981– Whether absence of discharge proviso resulting in infringement of appellant’s property rights under European Convention on Human Rights – Appeal dismissed
The appellant owned the Manchester Ship Canal. The second respondent was the statutory sewerage undertaker. In 2021, the first respondent secretary of state confirmed a compulsory purchase order pursuant to section 155 of the Water Industry Act 1991 which was required to permit the second respondent to discharge “water, soil and effluent” from a new 1.16 kilometre pipe into the canal.
An inspector appointed by the first respondent had recommended that the CPO be confirmed with amendments because the evidence showed that the water quality in the canal would be improved by the scheme of works of which the new pipe was a part.
The appellant had proposed the inclusion of a “discharge proviso” in the CPO which mirrored statutory provisions in the 1991 Act and provided that the sewerage undertaker was not authorised to use the outfall in breach of any environmental regulation or so as to affect prejudicially the purity and quality of the water or injuriously affect the receiving water. The CPO was confirmed without including the discharge proviso.
The judge dismissed a challenge by the appellant pursuant to section 23 of the Acquisition of Land Act 1981: [2022] EWHC 3282 (Admin). The appellant appealed contending, amongst other things, that the absence of the discharge proviso meant that the CPO was an impermissible infringement of the appellant’s property rights under article 1 of the first protocol (A1P1) of the European Convention on Human Rights.
Held: The appeal was dismissed.
(1) It was common ground that the appellant owned the canal; that the making of the CPO constituted an interference with the possession of the canal by permitting the second respondent to discharge from the new pipe into the canal; and that the CPO should be confirmed. The only issue was whether it should be confirmed with the discharge proviso.
The interference with the appellant’s property rights in permitting the discharge into the canal complied with the principle of lawfulness, because the CPO without the discharge proviso was made under the relevant legislation set out in the 1991 Act. The making of the CPO without the discharge proviso pursued the legitimate aim of improving environmental standards generally and the water quality in the canal.
Accordingly, on the evidence, the inspector was entitled to find that the grant of the CPO without the discharge proviso was necessary.
(2) In United Utilities Water Ltd v Manchester Ship Canal Co Ltd [2024] UKSC 22; [2024] EGLR 31 (MSC (No 2)), the Supreme Court held that the 1991 Act did not oust, either expressly or impliedly, common law causes of action and remedies to protect the enjoyment of property to which sections 117(5) and 186(3) of the Water Industry Act referred. The judge’s determination that there was no infringement of the appellant’s property rights under A1P1 was not affected by the judge’s application of the law before the decision in MSC (No 2); and in any event it was, and remained, proportionate to confirm the CPO without the discharge proviso, so that there was no impermissible infringement of the appellant’s A1P1 property rights protected by the ECHR.
The CPO had to be confirmed to improve the water quality in the canal. There was no need for equivalent protections that existed in relation to pre-1991 outfalls under sections 117(5) and 186(3) of the 1991 Act, because discharges from those outfalls had not been subjected to rigorous expert examination in the course of an inquiry to determine whether they were necessary and would improve water quality.
The discharge into the canal would be regulated and monitored by the Environment Agency. If the second respondent discharged in breach of its permit, a criminal offence would have been committed, and the second respondent had no more right than any other person to act in breach of the criminal law.
(3) There was a fair compensation scheme, established by the compulsory purchase legislation as modified by the 1991 Act, providing for the payment of compensation to the appellant: see section 155 and schedule 9 of the 1991 Act, section 4 of the 1981 Act and sections 1 and 5 of the Land Compensation Act 1961. There might be difficulties in calculating whether there might be a catastrophic failure at the treatment works which affected the appellant’s use of the canal, but estimates could be made on the basis of expert evidence about risks of discharges causing damage to the canal.
Courts were regularly involved in estimating what would have happened to make a lump sum valuation of damages. There were procedures to ensure payment of fair compensation. The compensation was determined, in the absence of agreement, in the Upper Tribunal.
The CPO was confirmed without the discharge proviso. There was no need to attempt to recreate existing statutory wording in section 117(5) and 186(3) of the 1991 Act to avoid an impermissible interference with MSC’s property rights.
(4) (per Males LJ) The purpose of the discharge proviso sought by the appellant was to preserve its private law right to bring a claim in nuisance and thereby to put it in the same position as regards the proposed new outfall into the canal as applied to pre-1991 outfalls.
Section 155 of the Act enabled the first respondent to provide for the extinguishment of the rights of the landowner whose land was to be compulsorily acquired.
The CPO in this case gave the second respondent the right to discharge water, soil and effluent into the canal, but it did so against a regulatory background that the discharge of foul water would be a criminal offence if it occurred in circumstances not permitted by the Environment Agency, and it provided for compensation to be payable to the appellant.
While the compensation might not be equivalent to the damages payable in a claim for nuisance, it was well established that compensation for the loss of property rights under A1P1 need not equate to common law damages. Moreover, courts should give great weight to the fact that a detailed scheme had been specifically endorsed by parliament in primary legislation as an adequate protection for A1P1 rights.
Tom de la Mare KC, Charles Morgan and George Molyneaux (instructed by Broadfield Law UK LLP) appeared for the appellant; Guy Williams KC and Sasha Blackmore KC (instructed by the Government Legal Department) appeared for the first respondent; James Strachan KC and Jonathan Darby (instructed by Pinsent Masons LLP) appeared for the second respondent.
Eileen O’Grady, barrister
