Judgments - Marcic (Respondent) v. Thames Water Utilities Limited (Appellants)

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    33.  I must respectfully part company with the Court of Appeal. The Goldman and Leakey cases exemplify the standard of conduct expected today of an occupier of land towards his neighbour. But Thames Water is no ordinary occupier of land. The public sewers under Old Church Lane are vested in Thames Water pursuant to the provisions of the 1991 Act, section 179, as a sewerage undertaker. Thames Water's obligations regarding these sewers cannot sensibly be considered without regard to the elaborate statutory scheme of which section 179 is only one part. The common law of nuisance should not impose on Thames Water obligations inconsistent with the statutory scheme. To do so would run counter to the intention of Parliament as expressed in the Water Industry Act 1991.

    34.  In my view the cause of action in nuisance asserted by Mr Marcic is inconsistent with the statutory scheme. Mr Marcic's claim is expressed in various ways but in practical terms it always comes down to this: Thames Water ought to build more sewers. This is the only way Thames Water can prevent sewer flooding of Mr Marcic's property. This is the only way because it is not suggested that Thames Water failed to operate its existing sewage system properly by not cleaning or maintaining it. Nor can Thames Water control the volume of water entering the sewers under Old Church Lane. Every new house built has an absolute right to connect. Thames Water is obliged to accept these connections: section 106 of the 1991 Act. A sewerage undertaker is unable to prevent connections being made to the existing system, and the ingress of water through these connections, even if this risks overloading the existing sewers. But, so Mr Marcic's claim runs, although Thames Water was operating its existing system properly, and although Thames Water had no control over the volume of water entering the system, it was within Thames Water's power to build more sewers, as the company now has done, to cope with the increased volume of water entering the system. Mr Marcic, it is said, has a cause of action at law in respect of Thames Water's failure to construct more sewers before it eventually did in June 2003.

    35.  The difficulty I have with this line of argument is that it ignores the statutory limitations on the enforcement of sewerage undertakers' drainage obligations. Since sewerage undertakers have no control over the volume of water entering their sewerage systems it would be surprising if Parliament intended that whenever sewer flooding occurs, every householder whose property has been affected can sue the appointed sewerage undertaker for an order that the company build more sewers or pay damages. On the contrary, it is abundantly clear that one important purpose of the enforcement scheme in the 1991 Act is that individual householders should not be able to launch proceedings in respect of failure to build sufficient sewers. When flooding occurs the first enforcement step under the statute is that the Director, as the regulator of the industry, will consider whether to make an enforcement order. He will look at the position of an individual householder but in the context of the wider considerations spelled out in the statute. Individual householders may bring proceedings in respect of inadequate drainage only when the undertaker has failed to comply with an enforcement order made by the Secretary of State or the Director. The existence of a parallel common law right, whereby individual householders who suffer sewer flooding may themselves bring court proceedings when no enforcement order has been made, would set at nought the statutory scheme. It would effectively supplant the regulatory role the Director was intended to discharge when questions of sewer flooding arise.

    36.  For this reason I consider there is no room in this case for a common law cause of action in nuisance as submitted by Mr Marcic and held by the Court of Appeal. On this point I agree with the decision of Judge Richard Havery.

    The claim under the Human Rights Act 1998

    37.  I turn to Mr Marcic's claim under the Human Rights Act 1998. His claim is that as a public authority within the meaning of section 6 of the Human Rights Act 1998 Thames Water has acted unlawfully. Thames Water has conducted itself in a way which is incompatible with Mr Marcic's Convention rights under article 8 of the Convention and article 1 of the First Protocol to the Convention. His submission was to the following effect. The flooding of Mr Marcic's property falls within the first paragraph of article 8 and also within article 1 of the First Protocol. That was common ground between the parties. Direct and serious interference of this nature with a person's home is prima facie a violation of a person's right to respect for his private and family life (article 8) and of his entitlement to the peaceful enjoyment of his possessions (article 1 of the First Protocol). The burden of justifying this interference rests on Thames Water. At the trial of the preliminary issues Thames Water failed to discharge this burden. The trial judge found that the system of priorities used by Thames Water in deciding whether to carry out flood alleviation works might be entirely fair. The judge also said that on the limited evidence before him it was not possible to decide this issue, or to decide whether for all its apparent faults the system fell within the wide margin of discretion open to Thames Water and the Director: [2002] QB 929, 964, para 102.

    38.  To my mind the fatal weakness in this submission is the same as that afflicting Mr Marcic's claim in nuisance: it does not take sufficient account of the statutory scheme under which Thames Water is operating the offending sewers. The need to adopt some system of priorities for building more sewers is self-evident. So is the need for the system to be fair. A fair system of priorities necessarily involves balancing many intangible factors. Whether the system adopted by a sewerage undertaker is fair is a matter inherently more suited for decision by the industry regulator than by a court. And the statutory scheme so provides. Moreover, the statutory scheme provides a remedy where a system of priorities is not fair. An unfair system of priorities means that a sewerage undertaker is not properly discharging its statutory drainage obligation so far as those who are being treated unfairly are concerned. The statute provides what should happen in these circumstances. The Director is charged with deciding whether to make an enforcement order in respect of a sewerage undertaker's failure to drain property properly. Parliament entrusted this decision to the Director, not the courts.

    39.  What happens in practice accords with this statutory scheme. When people affected by sewer flooding complain to the Director he considers whether he should require the sewerage undertaker to take remedial action. Before doing so he considers, among other matters, the severity and history of the problem in the context of that undertaker's sewer flooding relief programme, as allowed for in its current price limits. In many cases the company agrees to take action, but sometimes he accepts that a solution is not possible in the short term.

    40.  So the claim based on the Human Rights Act 1998 raises a broader issue: is the statutory scheme as a whole, of which this enforcement procedure is part, Convention-compliant? Stated more specifically and at the risk of over-simplification, is the statutory scheme unreasonable in its impact on Mr Marcic and other householders whose properties are periodically subjected to sewer flooding?

    41.  The recent decision of the European Court of Human Rights, sitting as a Grand Chamber, in Hatton v United Kingdom Application No 36022/97, (unreported) 8 July 2003 confirms how courts should approach questions such as these. In Hatton's case the applicants lived near Heathrow airport. They claimed that the government's policy on night flights at Heathrow violated their rights under article 8. The court emphasised 'the fundamentally subsidiary nature' of the Convention. National authorities have 'direct democratic legitimation' and are in principle better placed than an international court to evaluate local needs and conditions. In matters of general policy, on which opinions within a democratic society may reasonably differ widely, 'the role of the domestic policy maker should be given special weight': see paragraph 97. A fair balance must be struck between the interests of the individual and of the community as a whole.

    42.  In the present case the interests Parliament had to balance included, on the one hand, the interests of customers of a company whose properties are prone to sewer flooding and, on the other hand, all the other customers of the company whose properties are drained through the company's sewers. The interests of the first group conflict with the interests of the company's customers as a whole in that only a minority of customers suffer sewer flooding but the company's customers as a whole meet the cost of building more sewers. As already noted, the balance struck by the statutory scheme is to impose a general drainage obligation on a sewerage undertaker but to entrust enforcement of this obligation to an independent regulator who has regard to all the different interests involved. Decisions of the Director are of course subject to an appropriately penetrating degree of judicial review by the courts.

    43.  In principle this scheme seems to me to strike a reasonable balance. Parliament acted well within its bounds as policy maker. In Mr Marcic's case matters plainly went awry. It cannot be acceptable that in 2001, several years after Thames Water knew of Mr Marcic's serious problems, there was still no prospect of the necessary work being carried out for the foreseeable future. At times Thames Water handled Mr Marcic's complaint in a tardy and insensitive fashion. But the malfunctioning of the statutory scheme on this occasion does not cast doubt on its overall fairness as a scheme. A complaint by an individual about his particular case can, and should, be pursued with the Director pursuant to the statutory scheme, with the long stop availability of judicial review. That remedial avenue was not taken in this case.

    44.  I must add that one aspect of the statutory scheme as presently administered does cause concern. This is the uncertain position regarding payment of compensation to those who suffer flooding while waiting for flood alleviation works to be carried out. A modest statutory compensation scheme exists regarding internal flooding: see paragraph 7B of the Water Supply and Sewerage Services (Customer Service Standards) Regulations 1989, SI 1989/1159, as amended by SI 1993/500 and SI 2000/2301. There seems to be no statutory provision regarding external sewer flooding. Some sewerage undertakers make payments, others do not. They all provide a free clean up and disinfecting service, including removal of residual effluent.

    45.  It seems to me that, in principle, if it is not practicable for reasons of expense to carry out remedial works for the time being, those who enjoy the benefit of effective drainage should bear the cost of paying some compensation to those whose properties are situated lower down in the catchment area and who, in consequence, have to endure intolerable sewer flooding, whether internal or external.. As the Court of Appeal noted, the flooding is the consequence of the benefit provided to those making use of the system: [2002] QB 929, 1001, para 113. The minority who suffer damage and disturbance as a consequence of the inadequacy of the sewerage system ought not to be required to bear an unreasonable burden. This is a matter the Director and others should reconsider in the light of the facts in the present case.

    46.  For these reasons I consider the claim under the Human Rights Act 1998 is ill-founded. The scheme set up by the 1991 Act is Convention-compliant. The scheme provides a remedy for persons in Mr Marcic's unhappy position, but Mr Marcic chose not to avail himself of this remedy.

    47.  Accordingly this appeal should be allowed. Save as to costs, the order of the Court of Appeal should be set aside and the order of the trial judge varied so as to answer all the preliminary issues in the negative. As to costs, the House gave leave to Thames Water to appeal on terms that the existing costs orders in the courts below remain undisturbed and that Thames Water pay Mr Marcic's costs in the House in any event.

LORD STEYN

My Lords,

    48.  I have read the opinions of my noble and learned friends, Lord Nicholls of Birkenhead and Lord Hoffmann. For the reasons they have given I too would allow this appeal.

LORD HOFFMANN

My Lords,

    49.  Thames Water Utilities Ltd ("Thames Water") is a statutory sewerage undertaker. Mr Marcic has a house in Stanmore, within the area for which Thames Water is responsible. Since 1992 Mr Marcic's garden has suffered periodic flooding. The reason for the flooding is that the sewers in his street are overloaded. At the time they were laid, the surface and foul water sewers were adequate. But many more houses have since been built. Each has the right to connect itself to the existing sewers: section 106 of the Water Industry Act 1991. The result of the overload is that in heavy rain the surface water sewer becomes so full that the water overflows through the gullies into Mr Marcic's low lying garden. Still worse, the surface water enters the foul sewer and causes sewage to flow back onto his property through his foul drain. Since 1992 the garden has been regularly flooded. Only Mr Marcic's private flood defence system, constructed at a cost of some £16,000, has prevented the water from entering the house.

    50.  Thames Water has a statutory duty, under section 94(1) of the 1991 Act:

    "(a)  to provide, improve and extend such a system of public sewers (whether inside its area or elsewhere) and so to cleanse and maintain those sewers as to ensure that that area is and continues to be effectually drained; and

    (b)  to make provision for the emptying of those sewers and such further provision (whether inside its area or elsewhere) as is necessary from time to time for effectually dealing, by means of sewage disposal works or otherwise, with the contents of those sewers."

    51.  Mr Marcic, however, has not attempted to enforce this duty. The reason is that Chapter II of Part II of the 1991 Act contains an exclusive code for the enforcement of, among others, the duty under section 94(1). Putting it shortly, the only person who can in the first instance enforce the duty is the Director General of Water Services: section 18. He may make an "enforcement order", provisional or final, for the purpose of securing compliance. If an enforcement order is made, a failure to comply with the order is actionable at the suit of members of the public who thereby sustain loss or damage: section 22(1) and (2). Section 18(8) makes it clear that the statutory remedies are the only remedies available for an act or omission which constitutes a contravention of duties enforceable under section 18. So all that Mr Marcic could do by way of enforcement of the section 94(1) duty was to make a complaint to the Director, in which case it would be the duty of the Director to consider the complaint and take such steps, if any, as he thought appropriate: see section 30.

    52.  Mr Marcic chose not the avail himself of this route. Instead, he issued a writ claiming an injunction and damages for nuisance. Section 18(8) does not exclude any remedies "available in respect of [an] act or omission otherwise than by virtue of its constituting … a contravention [of a duty enforceable under section 18]." It follows that if the failure to improve the sewers to meet the increased demand gives rise to a cause of action at common law, it is not excluded by the statute. The question is whether there is such a cause of action.

    53.  The flooding has not been due to any failure on the part of Thames Water to clean and maintain the existing sewers. Nor are they responsible for the increased use. They have, as I have said, a statutory duty to accept whatever water and sewage the owners of property in their area choose to discharge. The omission relied upon by Mr Marcic as giving rise to an actionable nuisance is their failure to construct new sewers with a greater capacity.

    54.  Until the decision of the Court of Appeal in this case, there was a line of authority which laid down that the failure of a sewage authority to construct new sewers did not constitute an actionable nuisance. The only remedy was by way of enforcement of the statutory duty now contained in section 94(1) of the 1991 Act, previously contained in section 14 of the Public Health Act 1936 and before that in section 15 of the Public Health Act 1875. The earlier acts also had a special procedure for enforcement which the courts held to be exhaustive: see Robinson v Workington Corpn [1897] 1 QB 619. The existence of this procedure for the enforcement of statutory duties did not (any more than section 18(8) of the 1991 Act) exclude common law remedies for common law torts, such as a nuisance arising from failure to keep a sewer properly cleaned: Baron v Portslade Urban District Council [1900] 2 QB 588. But the courts consistently held that failure to construct new sewers was not such a nuisance.

    55.  The principal authorities for this last proposition were three cases in the late nineteenth century: Glossop v Heston and Isleworth Local Board (1879) 12 Ch D 102; Attorney General v Dorking Union Guardians (1882) 20 Ch D 595 and Robinson's case [1897] 1 QB 619, to which I have already referred, to which may be added Hesketh v Birmingham Corpn [1924] 1 KB 260 which followed Robinson's case. It is not necessary to examine them in detail because their effect was summed up with customary lucidity by Denning LJ in Pride of Derby and Derbyshire Angling Association Ltd v British Celanese Ltd [1953] Ch 149. This was an action for nuisance against a local authority for discharging insufficiently treated effluent into the river Derwent. Denning LJ said, at p 190, that the plaintiffs:

    "have a perfectly good cause of action for nuisance, if they can show that the defendants created or continued the cause of the trouble; and it must be remembered that a person may 'continue' a nuisance by adopting it, or in some circumstances by omitting to remedy it: see Sedleigh-Denfield v O'Callaghan [1940] AC 880.

    This liability for nuisance has been applied in the past to sewage and drainage cases in this way: when a local authority take over or construct a sewage and drainage system which is adequate at the time to dispose of the sewage and surface water for their district, but which subsequently becomes inadequate owing to increased building which they cannot control, and for which they have no responsibility, they are not guilty of the ensuing nuisance. They obviously do not create it, nor do they continue it merely by doing nothing to enlarge or improve the system. The only remedy of the injured party is to complain to the Minister [of Health, under the 1936 Act enforcement procedure]."

    56.  This statement of law was followed a year later by Upjohn J in Smeaton v Ilford Corpn [1954] Ch 450, in which overloading caused the corporation's foul sewer to erupt through a manhole and discharge "deleterious and malodorous matter" into Mr Smeaton's garden. Upjohn J said, at pp 464-465:

    "No doubt the defendant corporation are bound to provide and maintain the sewers (see section 14 of the Public Health Act 1936), but they are not thereby causing or adopting the nuisance. It is not the sewers that constitute the nuisance; it is the fact that they are overloaded. That overloading, however, arises not from any act of the defendant corporation but because, under section 34 of the Public Health Act 1936…they are bound to permit occupiers of premises to make connexions to the sewer and to discharge their sewage therein…Nor, in my judgment, can the defendant corporation be said to continue the nuisance, for they have no power to prevent the ingress of sewage into the sewer."

    57.  Mr Marcic can therefore have a cause of action in nuisance only if these authorities are no longer good law. The Court of Appeal decided that they should no longer be followed. They said that the earlier cases had been overtaken by developments in the concept of "adopting" or "continuing" a nuisance which enabled one to say, in appropriate circumstances, that a sewerage undertaker had a common law duty to lay new sewers in order to prevent overloaded old ones from flooding neighbouring properties.

    58.  The cases relied upon by the Court of Appeal are those in which it has been held that a land owner may have a duty to take positive steps to remove a source of nuisance which he did not himself create. The leading case is of course Sedleigh-Denfield v O'Callaghan [1940] AC 880, in which the potential source of the nuisance was created by a trespasser. Attempts to distinguish cases in which the damage arose from natural causes (lightning or natural weathering of rocks and soil) failed in Goldman v Hargrave [1967] 1 AC 645 and Leakey v National Trust for Places of Historic Interest or Natural Beauty [1980] QB 485. The present law is that, as Denning LJ said in the Pride of Derby case [1953] Ch 149, 190 by reference to the Sedleigh-Denfield case [1940] AC 880, "a person may 'continue' a nuisance by adopting it, or in some circumstances by omitting to remedy it".

    59.  The Court of Appeal in the present case took the view, at [2002] QB 929, 997, para 97, that the four cases upon which Denning LJ based his summary of the law were decided when "the law of nuisance drew a clear distinction between misfeasance and non-feasance". I find this statement surprising when one considers that Denning LJ went to considerable lengths in the Pride of Derby case [1953] Ch 149 to point out that there was no such distinction, citing (among other cases) Baron v Portslade Urban District Council [1900] 2 QB 588, in which a local authority had been held liable for omitting to clean a sewer. The much narrower proposition which, at p 190, Denning LJ thought was supported by the four cases was that a local authority does not continue a nuisance emanating from a sewer "merely by doing nothing to enlarge and improve the system". In other words, the four cases are not about general principles of the law of nuisance. They are cases about sewers.

    60.  The Court of Appeal said that since the four cases were decided, the law of nuisance had been "radically extended" by the Sedleigh-Denfield case [1940] AC 880. This case was of course cited by Denning LJ, but he does not seem to have thought that it undermined his statement of the law about the obligations of local authorities in respect of sewers. The Goldman case [1967] 1 AC 645 and the Leakey case [1980] QB 485 were said to have made a "significant extension" to the law. It is true that they rejected a distinction between acts of third parties and natural events which Lord Wilberforce said, in the Goldman case at p 661, was "well designed to introduce confusion into the law" and lacked "any logical foundation." Both cases also discussed in greater detail the extent of the duty to remedy a potential nuisance. Otherwise, however, they were applications of the Sedleigh-Denfield principle.

    61.  Why should sewers be different? If the Sedleigh-Denfield case [1940] AC 880 lays down a general principle that an owner of land has a duty to take reasonable steps to prevent a nuisance arising from a known source of hazard, even though he did not himself create it, why should that not require him to construct new sewers if the court thinks it would have been reasonable to do so?

    62.  The difference in my opinion is that the Sedleigh-Denfield, Goldman and Leakey cases were dealing with disputes between neighbouring land owners simply in their capacity as individual land owners. In such cases it is fair and efficient to impose reciprocal duties upon each landowner to take whatever steps are reasonable to prevent his land becoming a source of injury to his neighbour. Even then, the question of what measures should reasonably have been taken may not be uncomplicated. As Lord Wilberforce said in Goldman's case [1967] 1 AC 645, 663, the court must (unusually) have regard to the individual circumstances of the defendant. In Leakey's case [1980] QB 485, 526 Megaw LJ recoiled from the prospect of a detailed examination of the defendant's financial resources and said it should be done on a broad basis.

    63.  Nevertheless, whatever the difficulties, the court in such cases is performing its usual function of deciding what is reasonable as between the two parties to the action. But the exercise becomes very different when one is dealing with the capital expenditure of a statutory undertaking providing public utilities on a large scale. The matter is no longer confined to the parties to the action. If one customer is given a certain level of services, everyone in the same circumstances should receive the same level of services. So the effect of a decision about what it would be reasonable to expect a sewerage undertaker to do for the plaintiff is extrapolated across the country. This in turn raises questions of public interest. Capital expenditure on new sewers has to be financed; interest must be paid on borrowings and privatised undertakers must earn a reasonable return. This expenditure can be met only be charges paid by consumers. Is it in the public interest that they should have to pay more? And does expenditure on the particular improvements with which the plaintiff is concerned represent the best order of priorities?

    64.  These are decisions which courts are not equipped to make in ordinary litigation. It is therefore not surprising that for more than a century the question of whether more or better sewers should be constructed has been entrusted by Parliament to administrators rather than judges. Under the 1875 Act, the procedure for enforcement of the statutory duty, pursuant to section 15, to "cause to be made such sewers as may be necessary for effectually draining their district" was not very sophisticated. An aggrieved member of the public could complain to the Local Government Board which, if satisfied there had been a default, was required to make an order limiting the time for performance of the duty. If there was still default, the order could be enforced by mandamus or the Board could do the work itself and charge the local authority with the cost. Under section 322 of the Public Health Act 1936 the complaint was made to the Minister of Health who had a discretion whether to order a local inquiry and a power, if satisfied there had been a default, to make an order requiring the work to be done.

 
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