In a significant legal development, water companies in the UK could face a surge of lawsuits over sewage discharges, according to legal experts, following a landmark Supreme Court ruling. The ruling, handed down on July 3, 2024, allows the Manchester Ship Canal Company to sue United Utilities over the alleged release of raw sewage into the canal.
The Supreme Court’s decision means that owners of adjacent waterways or even members of the public could potentially bring claims against other utility companies. This could lead to a wave of legal actions, particularly given the ongoing financial pressure and scrutiny faced by water companies for unauthorized discharges of waste.
The judges found that the Manchester Ship Canal Company was entitled to bring a nuisance or trespass claim for compensation over the release of “untreated foul water.” This ruling overturns previous decisions in both the High Court and the Court of Appeal. The case involved about 100 outfalls along the canal, where treated waste is released from the sewerage network, with raw sewage also being dumped when the system is over capacity.
Lawyers suggest that this ruling could open the floodgates for a range of potential claims from various parties, including the owners of adjacent waterways, members of the public, and environmental organizations. Those affected by any failures, such as swimmers, fishermen, and environmental organizations, now have a route to seek redress.
The ruling also sets a marker for water utility companies, with lawyers suggesting that issues could have been avoided if more investment had gone into improving the canal’s infrastructure. This could potentially apply to all water companies, as some, like Thames Water, have already invested billions of pounds in improving their infrastructure to mitigate similar issues.
Water firms have come under scrutiny for their environmental records in recent months. Following the ruling, United Utilities, one of the companies involved, stated that it understands and shares concerns about the need to improve and has a £3bn investment plan aimed at cutting pollution by improving infrastructure.
Environmental charities have welcomed the ruling, with the Environmental Law Foundation describing it as a “glad day for environmental justice.” However, some have raised concerns about the potential financial implications for utility companies, particularly those already struggling under heavy debt loads. The ruling could potentially lead to unlimited fines from the Environment Agency and private lawsuits, which could push some companies to the brink of insolvency.
The final decision on what companies can charge customers next year is not due until December, but sources close to the watchdog Ofwat suggest that water companies may argue that an increase in claims against them would be an additional cost they would need to make provision for, potentially leading to higher consumer bills.
