The Manchester Ship Canal Company Ltd v Secretary of State for Environment, Food and Rural Affairs & Anor

Factual and Procedural Background

This appeal concerns the challenge by the Appellant against the order and judgment of Judge Thornton dismissing a challenge pursuant to section 23 of the Acquisition of Land Act 1981. The challenge was directed at the decision by the Respondent Secretary of State for Environment, Food and Rural Affairs to confirm a Compulsory Purchase Order (CPO) made under section 155 of the Water Industry Act 1991. The CPO authorized Company B to discharge "water, soil and effluent" from a new pipe into the Manchester Ship Canal, owned by the Appellant, which had not been authorized by agreement and thus required compulsory acquisition of rights.

The new pipe replaced four pre-1991 pipes discharging into Salteye Brook, a watercourse draining into the Manchester Ship Canal. The discharge was subject to regulation by the Environment Agency. The Appellant proposed a "discharge proviso" to qualify the right to discharge granted by the CPO, mirroring statutory provisions protecting water quality and preserving private law remedies for nuisance and trespass related to discharges from pre-1991 outfalls. This proviso was not recommended by the inspector appointed by the Secretary of State following a local public inquiry, nor was it required by the Secretary of State in confirming the CPO.

The Appellant contended that the absence of the discharge proviso infringed its property rights under Article 1 of Protocol 1 (A1P1) of the European Convention on Human Rights (ECHR), while the Respondent and Company B argued that regulation by the Environment Agency and compensation provisions under the CPO scheme sufficiently protected those rights.

Legal Issues Presented

1. Whether the judge misunderstood the Appellant's position at the inquiry regarding the existence and scope of private law remedies for breach of the discharge proviso.
2. Whether, consequent to any misunderstanding, the judge’s application of the fair balance test under A1P1 was flawed, particularly regarding whether a less intrusive measure (the CPO with the discharge proviso) could have been used.
3. Whether, in light of the Supreme Court decision in the recent case concerning similar parties, the judge erred in assessing the impact of omitting the discharge proviso on the Appellant’s property rights and the proportionality of confirming the CPO without it.

Arguments of the Parties

Appellant's Arguments

• The Secretary of State erred in confirming the CPO without the discharge proviso, which was necessary to mirror statutory protections and preserve private law remedies for nuisance and trespass.
• The judge misread the Appellant’s submissions at the inquiry, wrongly concluding that the Appellant disavowed the relevance of private law remedies.
• The interference with the Appellant’s property rights under A1P1 was unlawful and disproportionate without the discharge proviso, as compensation under the CPO could not replicate common law damages.

Respondent's Arguments

• The judge correctly dismissed the appeal, properly interpreting the Appellant’s submissions and the law.
• The discharge proviso was unnecessary given the comprehensive regulation by the Environment Agency and the compensation mechanisms under the CPO scheme.
• The CPO would lead to environmental improvements and was made in the public interest, with no impermissible infringement of property rights.

Company B's Arguments

• Adopted the Respondent’s submissions, emphasizing that the Appellant’s case contained fallacies, including the need for equivalence with pre-1991 discharge regimes.
• The right granted by the CPO is not unfettered; discharges in breach of permits constitute criminal offences.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed whether the judge below misunderstood the Appellant’s submissions at the inquiry. It found that the judge correctly identified that the Appellant sought the discharge proviso but had disavowed reliance on private law remedies before the inspector, meaning the inspector was not required to determine the legal effect of the proviso in that context. The court agreed with the judge that new points raised on appeal, particularly regarding private law remedies, were not put before the inspector and thus could not be entertained.

Regarding the fair balance test under A1P1, the court held that since the first ground failed, the second ground dependent on it did not arise. The court considered the impact of the Supreme Court decision in MSC (No.2) on the judge’s findings. Although the judge’s legal summary of nuisance and negligence claims was not accurate post-MSC (No.2), this did not affect her conclusion that there was no infringement of property rights because the issue of available common law claims without the discharge proviso was not argued before the inspector or fully developed.

The court undertook its own proportionality assessment, concluding that the interference with the Appellant’s property rights was lawful, pursued a legitimate aim of improving water quality, and was proportionate. It emphasized that the statutory scheme, including the CPO process, environmental regulation by the Environment Agency, and compensation provisions, provided adequate protection. The court noted that the statutory regime for new outfalls differs fundamentally from that governing pre-1991 outfalls, which justified the absence of the discharge proviso.

The court also highlighted that the statutory scheme expressly authorizes compulsory acquisition of rights with compensation, and the environmental permit regime criminalizes unauthorized discharges, ensuring regulatory oversight. The Appellant’s argument that private law rights should be preserved equivalently to pre-existing outfalls was rejected as fallacious given the different statutory framework for new outfalls.

Holding and Implications

The court DISMISSED the appeal.

The decision confirms that the confirmation of the CPO without the discharge proviso does not impermissibly infringe the Appellant’s property rights under A1P1 of the ECHR. The statutory framework governing compulsory acquisition, environmental regulation, and compensation is sufficient to protect those rights. This ruling clarifies that the protections applicable to pre-1991 outfalls do not automatically extend to new outfalls authorized by compulsory purchase under the Water Industry Act. No new precedent was established beyond the application of existing principles to the facts of this case.