Canal & River Trust v Thames Water Utilities Ltd, Court of Appeal - Civil Division, March 02, 2018, [2018] EWCA Civ 342

Resolution Date:March 02, 2018
Issuing Organization:Civil Division
Actores:Canal & River Trust v Thames Water Utilities Ltd
 
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Case No: A3/2016/4155; 4168; 4169

Neutral Citation Number: [2018] EWCA Civ 342

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Hon Mrs Justice Asplin DBE

[2016] EWHC 1547 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 02/03/2018

Before :

LORD JUSTICE MCFARLANE

LORD JUSTICE FLOYD

and

LORD JUSTICE HENDERSON

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Between :

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Stephen Tromans QC and Catherine Dobson (instructed by Eversheds Sutherland (International) LLP) for the Appellant

Sa'ad Hossain QC and Sarah Abram (instructed by Berwin Leighton Paisner LLP) for the Respondent

Hearing dates: 23-25 January 2018

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JudgmentLord Justice Floyd:

  1. The issue to which this appeal is ultimately directed is the amount of money which the respondent, Thames Water Utilities Limited (``Thames''), must pay to the appellant, Canal & River Trust (``CRT''), under section 5 of the River Lee Water Act 1855 (``the 1855 Act'') or otherwise. It is, however, just a staging post on the road to that ultimate destination. The task of deciding on the correct sum to be paid under the 1855 Act is one which falls to the Secretary of State for the Environment, Food and Rural Affairs (``the Secretary of State''). By these Part 8 proceedings the parties invited the court to make declarations as to the purpose and effect of the statutory regime so as to assist the Secretary of State as to the proper legal basis for his ultimate determination. The proceedings came before Asplin J (as she then was) who duly made declarations with which neither party is wholly satisfied. They both appeal with the judge's permission. There is also a free-standing appeal by Thames against the costs order which the judge made, with permission granted by Arden LJ on the papers.

  2. Both parties are the successors to a number of predecessor bodies into whose shoes they have successively stepped. CRT is a company limited by guarantee with charitable status and with responsibility for preserving, protecting and operating inland waterways, including the River Lee. It took over those functions from the British Waterways Board in 2012. Before 2012 the relevant functions were, in reverse date order, those of the British Transport Commission, the Lee Conservancy Board, the Trustees of the River Lee and, ultimately, the individual ``Trustees'' appointed under the terms of the River Lee Act 1738.

  3. Thames is a private sector water company which is the successor to the Thames Water Authority and before that the Metropolitan Water Board (``MWB''). MWB was the successor to the New River Company (``NRC'') and the East London Waterworks Company (``ELWC''), together referred to in some of the legislation, and by me, as ``the Two Companies''.

  4. The River Lee is one of the waterways for which CRT is responsible. It rises near Luton and flows through north London into the River Thames near Canning Town. It has a navigable section known as the Lee Navigation from near Hertford to where it flows into the Thames. It has been an important source of water for London for hundreds of years.

  5. Thames abstracts water from the River Lee. 16% of the water supplied by Thames to its customers in London is drawn from the River Lee. Under section 5 of the 1855 Act Thames is liable to make annual payments to CRT, known as the Special Payments. The Secretary of State now has a power to fix the amount of the Special Payments by reference to what is ``just and reasonable'' by making an order under section 52(2) of the British Transport Commission Act 1949. The Secretary of State made such an order in 1995. In 2006 Thames applied to vary the amount of the Special Payments and British Waterways Board objected. In 2010 the Secretary of State indicated that consideration was being given to the process for resolving the dispute, but no determination had been made by 2014. The present proceedings were commenced in 2015 with the objective of enabling the Secretary of State to make his determination on a correct legal basis.

    The factual and legal background

  6. It is common ground that although it is possible to own water contained in a reservoir, there is no right at common law to ownership of or property in water flowing from time to time in a natural watercourse: such rights can only be created by statute. That has been the law since the old case of The Company of Proprietors of the River Medway v Earl of Romney (1861) 9 CB (NS) 575. The statutory provision in that case provided that ``the said river or streams so to be made navigable ... should be and were thereby vested in the said company, their successors, heirs, and assigns for ever''. The company brought an action in trespass against the defendants for abstracting water from the Medway to supply a local gaol and the lunatic asylum at Barming Heath. The defendants are reported to have argued that ``Parliament ... could never have intended to give these plaintiffs a property in a thing so changeable as the waters of a natural stream''. Willes J disagreed. He held that the rights granted were not to be construed as conveying only the rights which a private grant might have conveyed. The statute created a new species of statutory property and interest in the water, which was interfered with by its abstraction by the defendants.

  7. The statutes and orders of relevance to the arguments in the present appeal are set out in the following paragraphs. Statutes from the eighteenth and nineteenth centuries used Roman numerals as section numbers, but in what follows I have substituted the equivalent in the more familiar Hindu-Arabic system.

    The River Lee Act 1738 (``the 1738 Act'')

  8. The 1738 Act recites that disputes had arisen between the town of Hertford and the inhabitants of Ware on the one hand and NRC on the other concerning the water issuing out of the River Lee into the New River, but that an agreement had been reached whereby:

    ``...the Navigation between Hertford and Ware Bridge may be fixed and ascertained in the present Channel, and that the Quantity of Water which is to be taken from the River Lee, into the said New River, may be ascertained in the Manner and upon the Terms and Considerations hereinafter mentioned, which will redound to a general Good; but cannot be established or rendered effectual without the Aid of an Act of Parliament...''

  9. The 1738 Act nominated various individuals as Trustees to receive monies for improving the navigation of the River Lee. Section 5 gave NRC certain rights to take water from the river and, in effect, divert it into the New River at a particular point, through a timber gauge of specified dimensions. The water was to be taken to the New River through a course known as the Manifold Ditch. Section 11 contained an early example of a statutory grant of property rights in running water (albeit in a section of the New River, not the River Lee). It enacted that:

    ``the Course of Water or Ditch, called Manifold Ditch, and the Water running through the same to the said New River, shall for ever hereafter be deemed and taken to be a Part of the said New River; and the Property thereof shall be, and is hereby vested and settled in [NRC] for ever...'',

  10. Section 17 required NRC to make regular payments to the Trustees without expressly mentioning what the payments were in respect of. It is plain, however, that they were consideration for the grant of the right to the water.

    The East London Waterworks Act 1829 (``the 1829 Act'')

  11. Section 53 of the 1829 Act provided for payment to be made by ELWC for water which it took from the River Lee ``in order to compensate the Trustees of the said Navigation in respect thereof ... as a Consideration for the Water to be so taken.'' The sums were said to be ``applicable and be applied to the general Purposes of the said Navigation''.

    The River Lee Navigation Improvement Act 1850 (``the 1850 Act'')

  12. The 1850 Act was a public act of Parliament, enacted in part in order to confer on the Trustees a general power to sell and dispose of the surplus water in the River Lee, a purpose which it was again expressly recognised could not be effected without the authority of Parliament. The recitals referred to the public advantage to be secured by improvements to the Lee Navigation already effected and to be effected. The recitals included the following:

    ``and whereas the Trustees have from Time to Time effected various Improvements in the Navigation of the River, and it would be a great public Advantage if they were authorized further to improve the same, and to sell and dispose of the surplus water of the River Lee in manner here-after mentioned, and to appropriate the Monies arising from such Sale to the Purposes of this Act, and also to raise a further Sum of Money upon the Security of the Tolls, Rates and Property vested in them, to be appropriated in the same Manner.''

  13. The Trustees were made a body corporate by section 3, under the name ``The Trustees of the River Lee''. Section 12 authorised the Trustees to make, maintain and improve certain ``cuts'' in the river, and section 14 gave them powers to improve the Navigation more generally. Section 68 is of particular importance. It provides for the power to sell the water in the following terms:

    ``And be it enacted, That it shall be lawful for the Trustees from Time to Time to contract and agree, either permanently or for a stated Period, with any Waterworks Company, Corporation, Commissioners, or Persons now or hereafter to be authorized by Act of Parliament, Charter, or otherwise, or pursuant to any Agreement or Contract already entered into by the Trustees, or by any Person authorized by them in that Behalf, to supply with Water the Cities of London and Westminster, or either of them, or the Suburbs thereof, or any Part thereof respectively, or the Inhabitants of any other Town, District, or Place within the Counties of Hertford,...

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