House of Lords rules on strict liability

In its first review of the subject for a decade, the House of Lords has reviewed the common law principles under which civil liability without fault can be imposed for hazardous activities.

The strict liability principles of Rylands v Fletcher, named after the Victorian case where they were first proposed, have long caused difficulties because of their lack of precision, and in jurisdictions such as Australia and Scotland the courts have held that there should be no longer be a distinct head of liability under Rylands v Fletcher. Common law liability is subsumed under the general torts of negligence or nuisance, leaving any special strict liability rules to be determined by legislation.

In Transco plc v Stockport Metropolitan Borough Council (House of Lords,19 November 2003, UKHL 61) their Lordships were invited to follow the same course, but declined to do so. The resulting uncertainties were recognised, but they attempted to give more guidance on the circumstances in which liability would apply.

The case arose from a leak from a large water pipe supplying a block of flats in Stockport belonging to the local authority. Although the leak was quickly repaired on discovery, it was subsequently found that water had been seeping for a considerable time, causing local subsidence which damaged a gas pipeline belonging to Transco some distance away.

No negligence on the part of the defendants was alleged, and since this was a one-off event it did not fall within the normal principles of nuisance law which requires some element of continuous interference. The claimants therefore sued for compensation under the principles of Rylands v Fletcher.

Under these principles, an occupier of land can be held strictly liable for something on their property which escapes and causes damage. The original Victorian case concerned a dam which caused flooding to neighbouring property and, as Lord Hoffman noted, the principle could be said to have represented an internalising cost rule, "requiring an entrepreneur to provide by insurance or otherwise for the risks to others which his enterprise creates."

However, in subsequent case law, the courts have refused to impose a general principle of strict liability for any damage caused, and have restricted the application of the rule.

In the original case, the court confined liability to situations where the defendant could be said to be carrying on "non-natural" activities, and a number of defences have been developed, including acting under statutory authority or where the escape was due to an act of God or a third party. Furthermore, the principle is concerned with damage to property rather than personal injury.

The last time the House of Lords considered the principle in detail was in the 1993 Cambridge Water Company case (ENDS Report 227, pp 43-44 ). That involved the leakage of solvents from a leather factory which contaminated groundwater supplies.

The House of Lords held that Rylands v Fletcher remained a distinct principle of liability, but that liability would extend only to damage that was reasonably foreseeable. The defendants in that case escaped liability because at the time of the chemical spillages the particular pollution pathway was not foreseeable.

As to the question of whether the process itself could be said to be "natural" or "non natural" - the initial condition of liability under Rylands v Fletcher - the House of Lords had rejected the approaches in previous case law as overly narrow and indicated that a more generous approach should be adopted.

As Lord Goff noted, "I feel bound to say that the storage of substantial quantities of chemicals on industrial premises should be regarded as almost a classic case of non-natural use; and I find it very difficult to think that it should be thought objectionable to impose strict liability for damage caused in the event of their escape."

In the Transco case, the House of Lords reviewed the development of the principle of Rylands v Fletcher. It concluded that the principle still had a valuable function in certain cases, and was reluctant to follow the example of the Australian courts which had held in 1994 that it should not be applicable as involving too many uncertainties to be of contemporary value.

In this context, the House of Lords noted that other European countries such as Germany and France retained strict liability rules between occupiers of land for certain activities. But it was equally unwilling to propose any dramatic extension of strict liability principles, considering that this should be a matter for Parliament rather than the courts.

The judgments attempt to give more guidance on the key test of "non-natural" user. Lord Bingham appeared to distance himself from the broader approach suggested in Cambridge Water, and said the test should not be easily satisfied: "It must be shown that the defendant has done something which he recognised or judged by the standards appropriate at the relevant time and place he ought reasonably to have recognised, as giving rise to an exceptionally high risk of danger or mischief if there should be an escape, however unlikely an escape may have been thought to be."

The activities must be "extraordinary and unusual" which, Lord Bingham suggested, were criteria preferable to the concept of "non-natural". The fact that the activity might be of benefit to the wider community was not a relevant factor in applying this test.

Lord Hoffman again stressed that the principle was confined to damage to property and noted that insurance for various types of property damage was commonly available. He suggested that one guide to determining the question of "non-natural" user of land was "to ask whether the damage which eventuated was something against which an occupier could reasonably have been expected to have insured himself.

"Property insurance is relatively cheap and accessible; in my opinion people should be encouraged to insure their own property rather than seek to transfer the risk to others by means of litigation with the heavy transactional costs which that involves."

Applying the principles to the facts of the case, their Lordships had little difficulty in agreeing with the Court of Appeal that the supply of water through a pipe to a block of flats could not be described as a "non-natural" use of land. Although it was a larger pipe than normal, there was, according to Lord Hoffman, no evidence that it created a greater risk than is normally associated with domestic or commercial plumbing.

Lord Scott accepted that the defence of statutory authority did not apply as such, but considered it was highly relevant in deciding whether this was a natural and ordinary use of the land that the local authority were under a statutory duty to supply water to the flats: "The council had no alternative, given its statutory obligations to the occupiers of the flats, but to lay on a water supply. Strict liability cannot be attached to it for having done so."

The Transco decision means that strict liability under Rylands v Fletcher remains a distinct head of liability under common law in England and Wales, though the general thrust of the judgments is to confine the concept of "non-natural" user to activities that are of particularly high risk.

Nevertheless, the uncertainties of application remain considerable. In recent years, the House of Lords has tended to adopt a practice of providing a single lead judgment in order to provide greater clarity and certainty, but in this case separate judgments were given, each emphasising slightly different points of principle. Legal advisers and the insurance industry will now face the challenge of working out the true rationale of the decision and applying it to individual circumstances before them.

Richard Macrory, Professor of Environmental Law, University College, London

Richard Macrory is a board member of the Agency but the views expressed here are personal

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