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Marcic v Thames Water Utilities Limited, House of Lords, 4 December 2003

10 December 2003
The issues

Public utilities – human rights – nuisance – flooding

The facts

Mr Marcic had a house in Stanmore for which area Thames Water was responsible. Thames Water were a statutory sewerage undertaker. Since 1999 his garden had suffered periodic flooding. The flooding had been caused by reason of the fact that sewers in his street were overloaded. When they were laid, the surface water sewers were adequate. Subsequently, many more houses have been built each with the right to connect itself to existing sewers. In heavy rain the surface water sewer became so full that the water overflowed through the gullies into Mr Marcic’s low lying garden. The surface water entered the foul sewer and caused sewage to flow back onto this property through his foul drain. A private flood defence system had been constructed by Mr Marcic at a cost of £16,000.00 to prevent the water from entering the house. The Court of Appeal found that the Claimant had a valid claim against Thames in nuisance and also under the Human Rights Act 1998. Thames Water appealed to the House of Lords.

The decision

1. The water industry is currently regulated by the Water Industry Act 1991, which set out both the powers and duties of water undertakers and sewerage undertakers.

2. The exercise of those functions were subject to supervision and control by the Director General of Water Surfaces who was the regulator of the water industry in England and Wales. Chapter 2 of Part 2 of that Act contained a code for the enforcement of duties owed by undertakers. That could have permitted the Director General to enforce the obligations of a sewerage undertaker by means of an Enforcement Order provisional or final. If an Enforcement Order was made, a failure to comply with that Order was actionable by ordinary members of the public who suffered loss or damage because of the failure. All that Mr Marcic could do was to make a complaint to the Director. He chose not to do this but instead issued a Writ claiming an Injunction and damages for nuisance.

3. The flooding was not due to a failure on the part of the Defendant to clean and maintain the existing sewers. Nor were they responsible for their increased use. The omission relied on by Mr Marcic was their failure to construct new sewers of a greater capacity. Written submissions had been made by the Director on the financial implications of carrying out remedial work. The cost of removing the risk of sewer flooding varied widely from as little as £5,000.00 to more than £200,000.00 depending on the scale and nature of the work. The average cost per property was between £50,000.00 and £70,000.00. The cost to Thames Water of alleviating the flooding problems of all customers in their area would be at least a billion pounds. The cost did not come from public funds but had to be met by customers by way of sewerage charges. However sewerage undertakers were not at liberty to fix the amount of sewerage charges, which were limits, which were subject to being fixed by the Director. When fixing charging limits, the Director had to balance the need to alleviate sewer flooding, its cost, the consequent increase in sewerage charges, and also to take into account further needs such as the need for investment to meet other environmental standards set by the government often pursuant to European Union Directives. The Director had previously taken a cautious approach partly because of the lack of reliable information as to the scale of sewer flooding and its cost.

4. Until the decision of the Court of Appeal in this case there had been a line of authority, which laid down that the failing of a sewer authority to construct new sewers did not amount to an actionable nuisance. The previous authorities were summed up in their effect by Lord Justice Denning in Pride of Derby and Derbyshire Angling Association Ltd v British Celanese Limited. That case decided that a Claimant might have a perfectly good cause of action for nuisance if he could show that the Defendant created or continued the cause of the trouble and that a person might continue a nuisance by adopting it or by omitting to remedy it – see Sedleigh-Denfield -v- O’Callaghan. However where a local authority took over or constructed a sewer or drainage system, which was adequate at the time to dispose of the sewage and surface water, but had subsequently become inadequate for reasons beyond their control and for which they had no responsibility, they were not guilty of a nuisance.

5. The Court of Appeal had decided in favour of Mr Marcic on the basis that the law of nuisance had been radically extended by the Sedligh-Denfield case. There was a distinction however between this situation and that envisaged by Lord Justice Denning and in Sedleigh-Denfield and other cases such as Goldman -v- Hardgrave and Leakey -v- National Trust relied upon by the Court of Appeal. The difference was that the latter cases were dealing with disputes between neighbouring landowners simply in their capacity as landowners. In such cases it was fair and efficient to impose reciprocal duties on each landowner to take whatever steps were necessary to prevent his land becoming a source of injury to his neighbour. However, in this case the Court was dealing with the capital expenditure of a statutory undertaker providing public utilities on a large scale. The matter was no longer confined to the parties to the action. If one customer was given a certain level of service everyone in the same circumstances should receive the same level. This raised questions of public interest. These were issues, which the Courts were not equipped to make in ordinary litigation. This was why a Statutory Enforcement procedure has been set up. After widespread floods of October 2000 the Director had commissioned further studies of the flooding problem and in March 2002 had issued a consultation paper proposing a policy revision for the period 2005 – 2010 by which remedial work were proposed. An interim agreement with Thames Water was also made approving additional investment to free 250 properties including that of the Claimant from risk of external flooding

6. It could not be right to set up a parallel common law right to run alongside the statutory scheme. The fairness of the priorities adopted by Thames Water was not justiciable. Parliament had not intended the fairness of priorities to be decided by a Judge but had intended the decision to rest with a director subject only to Judicial Review.

7. A claim had also been made under the Human Rights Act in respect of Mr Marcic’s convention rights to the privacy of his home and the protection of his property. Hatton -v- United Kingdom, a decision of the Grand Chamber of the European Court of Human Rights, made it clear that the convention did not accord absolute protection to property or residential premises but required a fair balance to be struck between the interests of people whose homes and property were affected and the interests of other people such as customers and the general public. National institutions were accorded a broad discretion in choosing the appropriate solution to the problem. There was no reason why parliament should not entrust such decisions to an independent regulator such as the Director.

Appeal allowed (the House had given leave to Thames Water to appeal on terms of the existing costs orders and the Courts below remained undisturbed and that Thames Water paid Mr Marcic’s costs in the House in any event).

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