The facts of the case were not at all uncommon.
Mr Marcic has lived in Stanmore, north-west London, since 1980. His house is at, or near, the lowest point in the lane. The surface and foul water from his house discharged into a Thames Water sewer. The property was frequently and seriously flooded from 1992 on because the public sewers overflowed at times of heavy rain. The house was badly affected, but Thames had done nothing to remedy the situation.
Mr Marcic sued Thames Water for nuisance, negligence, breach of statutory duty and under the Human Rights Act. Thames Water's defence was that it had no liability because it was acting in its statutory capacity under the Water Industry Act 1991 and it could only be sued if it had failed to comply with an "entitlement order" issued by the environment secretary; no such order had been issued. This defence, in a variety of forms, had been used successfully by water companies since the 19th century.
Thames Water also argued that it should not be liable because it had, responsibly, set up a priority system of reducing flooding problems. It was removing thousands of properties from the serious risk category at the cost of many millions of pounds.
Judge Havery, in the Construction Court, found that there was no foreseeable prospect of any work being carried out by Thames Water to prevent flooding to Mr Marcic's house; although the Thames Water group posted a £344m profit in 1999-2000, to deal promptly with customers such as Mr Marcic within a shorter time would need an increase in sewerage charges. Judge Havery, however, held that Mr Marcic was entitled to damages, but only on the ground that article 8 of the Human Rights Convention (respect for home) had been contravened.
Developers that convert adequate sewerage systems into inadequate ones may find themselves liable for nuisance
The Court of Appeal reviewed the decision. First, it held that Thames Water was not liable, as such, for breach of statutory duty under the 1991 act. Second, it confirmed that there was no absolute or strict liability simply because flooding was caused.
Thames Water was, however, liable for nuisance in tort. Lord Phillips confirmed that under the current law, ownership of land (or a sewer) "carries with it a duty to do whatever is reasonable in all the circumstances to prevent hazards on the land [or in the sewer], howsoever they may arise, from causing damage to a neighbour". The flooding was not "the inevitable consequence of the exercise" by Thames Water of its statutory powers. Where repeated flooding was caused by the inadequacy of the sewerage system, even if it was adequate when originally constructed and even if the inadequacy had been caused by the subsequent increase in usage of the system, Thames Water was liable to Mr Marcic unless it could prove that it had done all that was reasonable. Its priority system of addressing flooding problems was not enough; its failure to take steps to alleviate the flooding was not reasonable. Even the fact that Thames Water might have to buy land for a scheme to resolve the problem was no defence.
The court did not set aside Judge Havery's human rights finding, although, strictly speaking, it was unnecessary, if the common law provided a remedy, as it did, for the finding to stand.
This case has great ramifications for all those involved in the water industry. Water authorities will have to address, more promptly and effectively, inadequacies in sewerage systems which cause repeated flooding.
Robert Akenhead QC is a barrister specialising in construction law at Atkin Chambers and joint editor of Building Law Reports.