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Please see the below article from EPIC Investment Partners detailing their discussions on water companies amidst growing environmental concerns. Received this afternoon 04/07/2024.

A judicial decision over 14 years in the making ended on the 2nd of July, with the Supreme Court ruling in favour of private businesses and people over United Utilities, the water company responsible for Northwest England and some six million people. This landmark ruling, with its significant implications, has opened the door for private legal actions in nuisance and trespass against water companies due to unauthorised sewage discharges and the related effects of pollution.

As early as 2010, the Manchester Ship Canal Company, owners of the 129-year-old Manchester Ship Canal, tried to bring a claim that the discharges from United Utilities 121 sewage outfalls within the canal constituted a trespass. However, United Utilities argued that the 1991 Water Industry Act, which privatised the sector, meant only regulators could act. In 2012, the high court sided with United Utilities and dismissed the claim. Despite an appeal process, the Supreme Court upheld this ruling in 2014. 

In March 2021, the High Court confirmed this, stating it was the role of regulators, not the courts, to address problems caused by sewage dumping. However, The Environmental Law Foundation, supported by the Good Law Project, challenged this decision, arguing that there should be legal options for people directly affected by sewage pollution. The case went up to the Supreme Court, which overturned previous rulings and found that United Utilities can be held accountable for damage caused by discharges. Lord Reed and Lord Hodge said: “The supreme court unanimously allows the canal company’s appeal. It holds that the 1991 act does not prevent the canal company from bringing a claim in nuisance or trespass when the canal is polluted by discharges of foul water from United Utilities’ outfalls, even if there has been no negligence or deliberate misconduct.”

In a related development, United Utilities and five other water firms have been mandated to publish live sewage discharge maps. These maps, released before a 2025 government deadline, provide real-time updates on sewage overflows, helping the public know the safety of local waters. This initiative came after significant public pressure and environmental campaigns, particularly focusing on areas like Lake Windermere, where United Utilities had a major incident of raw sewage discharge.

Following this ruling, water companies in the UK, more broadly, could face a spate of legal challenges by people and businesses affected by sewage pollution, where fines and regulatory action have previously not been enough to curtail pollution. The Good Law Project’s interim head of legal, Jennine Walker, said: “This is a sensational victory. It gives us stronger legal tools… to hold water companies to account after repeated failures from our toothless and underfunded regulators… and empowers people and businesses to use the courts to challenge industrial-scale polluters like United Utilities, who have put profits and the shareholder interest over protecting our environment.”

These events underscore the increasing regulatory and legal challenges water companies face in the UK, particularly concerning environmental protection and public transparency. United Utilities Group shares fell -2.5% yesterday, however, the wider utility complex remained broadly flat.

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Alex Clare