Canal – Sewerage undertaker – Implied right of discharge – Respondent sewerage undertaker discharging water into appellants’ canals without consent – Whether implied power to discharge continuing under statutory transfer scheme – Appeal allowed The appellants were the owners of the Manchester Ship Canal and the Bridgewater Canal and the respondent was the sewerage undertaker for the locality. The appellants applied to the High Court for a declaration that the respondent had no right to discharge water into their canals via outfalls. The judge held that, where outfalls had been transferred to a sewerage undertaker under a transfer scheme created as part of the privatisation process under the Water Act 1989, the sewerage undertaker acquired the implied right of discharge that had existed prior to the 1989 Act; the Water Industry Act 1991 did not affect the entitlement of the respondent to discharge water which dated from before September 1989; and the respondent continued to enjoy the rights of discharge which its predecessors had had up to 1989: [2012] EWHC 232 (Ch). The appellants appealed. The question for the Court of Appeal was whether the power of discharge as implied in the statutory framework governing sewerage undertakers in 1897 had been permanently saved from repeal under the Water Act 1989 or the Water Industry Act 1991 because it had been 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 In earlier litigation, the Court of Appeal had held that the implied right of discharge of had been repealed by the 1991 Act or alternatively by the 1989 Act: British Waterways Board v Severn Trent Water Ltd 2001] EWCA Civ 276; [2001] PLSCS 63. In the present appeal, the respondent sought to restrict the effect of that judgment by arguing that, where the outfall belonged to the sewerage undertaker on the commencement date of the 1989 Act, the right to discharge sewer contents from that outfall onto 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 1989 Act, and had been preserved by legislation from any repeal. Held: The appeal was allowed. (1) The transfer scheme did not encompass the implied right of discharge. It was clear from section 4 of the 1989 Act that the transfer scheme was intended to apply to the whole of the transferor’s sewerage undertaking. It was clearly the purpose of the transfer scheme to ensure that all assets and rights were vested in the successor company by a single document. The transfer scheme was therefore not limited to matters for which a written agreement was required, or to transfers of non-assignable contracts or to property-related rights and liabilities. However, the implied right of discharge was not a right in the usual sense. It was simply an incident of the statutory functions of the sewerage undertaker, which were set out in the 1989 Act. It was different because at the time of the transfer scheme there was no need to transfer it. The expressions “functions” and “property, rights and liabilities” in section 4 fell to be treated as covering a separate subject-matter, and that restriction on what ought otherwise to constitute “rights” and “liabilities” could not therefore be extended by schedule 2 to the 1991 Act. It followed that the obligation to pay compensation was also not transferred. (2) In any event, the transfer scheme did not render the implied right of discharge (or any other statutory right) immune from statutory change. The right transferred under the scheme was not preserved by subsequent legislation from subsequent change. The transfer scheme did not take the statutory rights beyond the pale of the 1991 Act and was ineffective to freeze the position as it stood immediately at the date of the transfer scheme. Therefore, when the rights ceased to exist, they ceased to be exercisable notwithstanding the transfer scheme. (3) The decision in British Waterways Board v Severn Trent Water Ltd could not be distinguished from the present case and applied to any discharge from pre-1989 Act outfalls once the implied right of discharge was removed. In that case the Court of Appeal had decided after careful consideration of various provisions of the 1991 Act that a sewerage undertaker had no implied right of discharge. The relevant statutory change was effected by either the 1991 Act or the 1989 Act. Accordingly, even if the implied right of discharge from these existing outfalls had been transferred by a transfer scheme, it ceased to exist when it was extinguished by statute. (Per Sullivan LJ) Although the judge erred in distinguishing British Waterways Board, if the court had not been bound by that decision, his Lordship would not have concluded that the 1991 Act swept away the implied right to discharge that existed under the previous legislation. The 1991 Act was a consolidating Act. Since it maintained a general duty on sewerage undertakers to ensure that their areas were effectively drained, it was difficult to believe that Parliament had intended that the many existing, lawful discharges pursuant to the implied right to discharge should on the coming into effect of the 1991 Act become unlawful, without having made any transitional provisions giving sufficient time to the undertakers to make alternative arrangements for discharge to enable them to comply with their continuing statutory duty. Robert McCracken QC and Rebecca Clutton (instructed by Bircham Dyson Bell) appeared for the appellants; Jonathan Karas QC, Julian Greenhill and James McCreath (instructed by Pinsent Masons LLP) appeared for the respondent. Eileen O’Grady, barrister
Canal – Sewerage undertaker – Implied right of discharge – Respondent sewerage undertaker discharging water into appellants’ canals without consent – Whether implied power to discharge continuing under statutory transfer scheme – Appeal allowed The appellants were the owners of the Manchester Ship Canal and the Bridgewater Canal and the respondent was the sewerage undertaker for the locality. The appellants applied to the High Court for a declaration that the respondent had no right to discharge water into their canals via outfalls. The judge held that, where outfalls had been transferred to a sewerage undertaker under a transfer scheme created as part of the privatisation process under the Water Act 1989, the sewerage undertaker acquired the implied right of discharge that had existed prior to the 1989 Act; the Water Industry Act 1991 did not affect the entitlement of the respondent to discharge water which dated from before September 1989; and the respondent continued to enjoy the rights of discharge which its predecessors had had up to 1989: [2012] EWHC 232 (Ch). The appellants appealed. The question for the Court of Appeal was whether the power of discharge as implied in the statutory framework governing sewerage undertakers in 1897 had been permanently saved from repeal under the Water Act 1989 or the Water Industry Act 1991 because it had been 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, the Court of Appeal had held that the implied right of discharge of had been repealed by the 1991 Act or alternatively by the 1989 Act: British Waterways Board v Severn Trent Water Ltd 2001] EWCA Civ 276; [2001] PLSCS 63. In the present appeal, the respondent sought to restrict the effect of that judgment by arguing that, where the outfall belonged to the sewerage undertaker on the commencement date of the 1989 Act, the right to discharge sewer contents from that outfall onto 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 1989 Act, and had been preserved by legislation from any repeal. Held: The appeal was allowed. (1) The transfer scheme did not encompass the implied right of discharge. It was clear from section 4 of the 1989 Act that the transfer scheme was intended to apply to the whole of the transferor’s sewerage undertaking. It was clearly the purpose of the transfer scheme to ensure that all assets and rights were vested in the successor company by a single document. The transfer scheme was therefore not limited to matters for which a written agreement was required, or to transfers of non-assignable contracts or to property-related rights and liabilities. However, the implied right of discharge was not a right in the usual sense. It was simply an incident of the statutory functions of the sewerage undertaker, which were set out in the 1989 Act. It was different because at the time of the transfer scheme there was no need to transfer it. The expressions “functions” and “property, rights and liabilities” in section 4 fell to be treated as covering a separate subject-matter, and that restriction on what ought otherwise to constitute “rights” and “liabilities” could not therefore be extended by schedule 2 to the 1991 Act. It followed that the obligation to pay compensation was also not transferred. (2) In any event, the transfer scheme did not render the implied right of discharge (or any other statutory right) immune from statutory change. The right transferred under the scheme was not preserved by subsequent legislation from subsequent change. The transfer scheme did not take the statutory rights beyond the pale of the 1991 Act and was ineffective to freeze the position as it stood immediately at the date of the transfer scheme. Therefore, when the rights ceased to exist, they ceased to be exercisable notwithstanding the transfer scheme. (3) The decision in British Waterways Board v Severn Trent Water Ltd could not be distinguished from the present case and applied to any discharge from pre-1989 Act outfalls once the implied right of discharge was removed. In that case the Court of Appeal had decided after careful consideration of various provisions of the 1991 Act that a sewerage undertaker had no implied right of discharge. The relevant statutory change was effected by either the 1991 Act or the 1989 Act. Accordingly, even if the implied right of discharge from these existing outfalls had been transferred by a transfer scheme, it ceased to exist when it was extinguished by statute. (Per Sullivan LJ) Although the judge erred in distinguishing British Waterways Board, if the court had not been bound by that decision, his Lordship would not have concluded that the 1991 Act swept away the implied right to discharge that existed under the previous legislation. The 1991 Act was a consolidating Act. Since it maintained a general duty on sewerage undertakers to ensure that their areas were effectively drained, it was difficult to believe that Parliament had intended that the many existing, lawful discharges pursuant to the implied right to discharge should on the coming into effect of the 1991 Act become unlawful, without having made any transitional provisions giving sufficient time to the undertakers to make alternative arrangements for discharge to enable them to comply with their continuing statutory duty. Robert McCracken QC and Rebecca Clutton (instructed by Bircham Dyson Bell) appeared for the appellants; Jonathan Karas QC, Julian Greenhill and James McCreath (instructed by Pinsent Masons LLP) appeared for the respondent. Eileen O’Grady, barrister
