Transco plc (formerly BG plc and BG Transco plc) (Appellants) v Stockport Metropolitan Borough Council (Respondents)
20. The possibility of a fracture in the unsupported gas pipe was obviously hazardous and Transco quickly took steps to repair the damage. The cost of the works required to restore support and cover the pipe was £93,681.
Rylands v Fletcher
21. Transco sued the council to recover the cost of repair. It did not allege that fracture in the pipe and consequent escape of water was caused by any lack of care. It did say the damage to the embankment would not have happened if council had not allowed the drains and culverts under the old railway to become blocked, but the judge said that this had made no difference and there has been no appeal against his finding. Transco's main claim was that the council was liable without proof of negligence under the rule in Rylands v Fletcher (1868) LR 3 HL 330. On this ground it succeeded before the judge but his decision was reversed by the Court of Appeal.
22. The rule in Rylands v Fletcher needs little introduction, the story of the flooding of Mr Fletcher's Lancashire coal mine by the water from Mr Rylands' mill reservoir in 1860-61 being known to every law student. It was decided according to a rule which Blackburn J, speaking for the Exchequer Chamber ((1866) LR 1 Ex 265, 279), formulated in terms afterwards approved by the House of Lords ( LR 3 HL 330, 339-340):
23. In the House of Lords, Lord Cairns LC LR 3 HL 330, 338-339 put the matter in this way:
The legal background to the rule
24. Lord Cairns said, at p 338, that the principles were "extremely simple" and Blackburn J disclaimed any originality in the formulation of the rule ("I wasted much time in the preparation of the judgment in Rylands v Fletcher if I did not succeed in showing that the law held to govern it had been the law for at least 300 years": Ross v Fedden (1872) 26 LT 966, 968) but posterity has taken him to have protested too much. The chapters devoted to the rule in every textbook on torts proclaim the contrary. None of the cases which he cited (except possibly the reference to cattle trespass) decided that an occupier could be liable for damage which was not reasonably foreseeable. They were cases about whether one occupier of land was entitled to inflict damage upon another, irrespective of whether it was foreseeable or even intentional. In other words, they were ordinary nuisance cases, concerned with the kind of damage of which an occupier could complain.
25. Lord Cairns, LR 3 HL 330, 339, contrasted Smith v Kenrick (1849) 7 CB 515 and Baird v Williamson (1863) 15 CB(NS) 317. In both, the question was whether the defendant had the right to conduct his mining operations so that water flowed into his neighbour's mine. In the first the answer was yes, because the defendant had merely dug holes in the ordinary course of mining and the water flowed into the other mine by gravitation ("naturally"). In the other, the answer was no because the water from the defendant's mine had been raised to a higher level by pumping ("non-naturally") and then flowed into the other mine. But neither addressed the question of whether the escape was reasonably foreseeable; in both cases, the defendant was obviously well aware that his water was flowing into his neighbour's mine. The issue in the case was whether the neighbour was obliged to put up with it or whether the defendant was obliged to keep the water in.
26. But a conclusion that an occupier of land has no right to discharge water or filth (Tenant v Goldwin (1704) 2 Ld Raym 1089) or chemicals (St Helen's Smelting Co v Tipping (1865) 11 HL Cas 642) upon his neighbour's land is not inconsistent with a rule that he will be liable in damages only for damage caused by a discharge which was intended or foreseeable. Indeed, that is the general rule of liability for nuisance today: Overseas Tankship (UK) Ltd v Miller Steamship Co Pty (The Wagon Mound (No 2)  1 AC 617. Liability in nuisance is strict in the sense that one has no right to carry on an activity which unreasonably interferes with a neighbour's use of land merely because one is doing it with all reasonable care. If it cannot be done without causing an unreasonable interference, it cannot be done at all. But liability to pay damages is limited to damage which was reasonably foreseeable.
27. Rylands v Fletcher was therefore an innovation in being the first clear imposition of liability for damage caused by an escape which was not alleged to be either intended or reasonably foreseeable. I think that this is what Professor Newark meant when he said in his celebrated article ("The Boundaries of Nuisance" (1949) 65 LQR 480, 488) that the novelty in Rylands v Fletcher was the decision that "an isolated escape is actionable". That is not because a single deluge is less of a nuisance than a steady trickle, but because repeated escapes such as the discharge of water in the mining cases and the discharge of chemicals in the factory cases do not raise any question about whether the escape was reasonably foreseeable. If the defendant does not know what he is doing, the plaintiff will certainly tell him. It is the single escape which raises the question of whether or not it was reasonably foreseeable and, if not, whether the defendant should nevertheless be liable. Rylands v Fletcher decided that he should.
The social background to the rule
28. Although the judgment of Blackburn J is constructed in the traditional common law style of deducing principle from precedent, without reference to questions of social policy, Professor Brian Simpson has demonstrated in his article "Legal Liability for Bursting Reservoirs: The Historical Context of Rylands v Fletcher" (1984) 13 J Leg Stud 209 that the background to the case was public anxiety about the safety of reservoirs, caused in particular by the bursting of the Bradfield Reservoir near Sheffield on 12 March 1864, with the loss of about 250 lives. The judicial response was to impose strict liability upon the proprietors of reservoirs. But, since the common law deals in principles rather than ad hoc solutions, the rule had to be more widely formulated.
29. It is tempting to see, beneath the surface of the rule, a policy of requiring the costs of a commercial enterprise to be internalised; to require the entrepreneur to provide, by insurance or otherwise, for the risks to others which his enterprise creates. That was certainly the opinion of Bramwell B, who was in favour of liability when the case was before the Court of Exchequer: (1865) 3 H & C 774. He had a clear and consistent view on the matter: see Bamford v Turnley (1862) 3 B & S 62, 84-85 and Hammersmith and City Railway Co v Brand (1867) LR 2 QB 223, 230-231. But others thought differently. They considered that the public interest in promoting economic development made it unreasonable to hold an entrepreneur liable when he had not been negligent: see Wildtree Hotels Ltd v Harrow London Borough Council  2 AC 1, 8-9 for a discussion of this debate in the context of compensation for disturbance caused by the construction and operation of works authorised by statutory powers. On the whole, it was the latter view - no liability without fault - which gained the ascendancy. With hindsight, Rylands v Fletcher can be seen as an isolated victory for the internalisers. The following century saw a steady refusal to treat it as laying down any broad principle of liability. I shall briefly trace the various restrictions imposed on its scope.
Restrictions on the rule
(a) Statutory authority
30. A statute which authorises the construction of works like a reservoir, involving risk to others, may deal expressly with the liability of the undertakers. It may provide that they are to be strictly liable, liable only for negligence or not liable at all. But what if it contains no express provision? If the principle of Rylands v Fletcher is that costs should be internalised, the undertakers should be liable in the same way as private entrepreneurs. The fact that Parliament considered the construction and operation of the works to be in the public interest should make no difference. As Bramwell B repeatedly explained, the risk should be borne by the public and not by the individual who happens to have been injured. But within a year of the decision of the House of Lords in Rylands v Fletcher, Blackburn J advised the House that, in the absence of negligence, damage caused by operations authorised by statute is not compensatable unless the statute expressly so provides: see Hammersmith and City Railway Co v Brand (1869) LR 4 HL 171, 196. The default position is that the owner of land injured by the operations "suffers a private loss for the public benefit". In Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430, 455 Lord Blackburn summed up the law:
31. The effect of this principle was to exclude the application of the rule in Rylands v Fletcher to works constructed or conducted under statutory authority: see Green v Chelsea Waterworks Co (1894) 70 LT 547; Dunne v North Western Gas Board  2 QB 806.
(b) Acts of God and third parties
32. Escapes of water and the like are often the result of natural events - heavy rain or drains blocked by falling leaves - or the acts of third parties, like vandals who open taps or sluices. This form of causation does not usually make the damage any the less a consequence of the risk created by the presence of the water or other escaping substance. No serious principle of allocating risk to the enterprise would leave the injured third party to pursue his remedy against the vandal. But early cases on Rylands v Fletcher quickly established that natural events ("Acts of God") and acts of third parties excluded strict liability. In Carstairs v Taylor (1871) LR 6 Ex 217, 221 Kelly CB said that he thought a rat gnawing a hole in a wooden gutter box counted as an Act of God and in Nichols v Marsland (1876) 2 Ex D 1 Mellish LJ (who, as counsel, had lost Rylands v Fletcher) said that an exceptionally heavy rainstorm was a sufficient excuse. In Rickards v Lothian  AC 263 the same was said of the act of a vandal who blocked a washbasin and turned on the tap. By contrast, acts of third parties and natural events are not defences to the strict criminal liability imposed by section 85(1) of the Water Resources Act 1991 for polluting controlled waters unless they are really exceptional events: Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd  2 AC 22.
33. Rylands v Fletcher established that, in a case to which the rule applies, the defendant will be liable even if he could not reasonably have foreseen that there would be an escape. But is he liable for all the consequences of the escape? In Cambridge Water Co v Eastern Counties Leather plc  2 AC 264 the House of Lords decided that liability was limited to damage which was what Blackburn J had called the "natural", ie reasonably foreseeable, consequence of the escape. Lord Goff of Chieveley, in a speech which repays close attention, took the rule back to its origins in the law of nuisance and said that liability should be no more extensive than it would have been in nuisance if the discharge itself had been negligent or intentional. Adopting the opinion of Professor Newark, to which I have already referred, he said that the novel feature of Rylands v Fletcher was to create liability for an "isolated" (ie unforeseeable) escape. But the rule was nevertheless founded on the principles of nuisance and should not otherwise impose liability for unforeseeable damage.
34. In Read v J Lyons & Co Ltd  AC 156 a radical attempt was made to persuade the House of Lords to develop the rule into a broad principle that an enterprise which created an unusual risk of damage should bear that risk. Mrs Read had been drafted into the Ministry of Supply and directed to inspect the manufacture of munitions at a factory operated by J Lyons & Company Ltd. In August 1942 she was injured by the explosion of a shell. There was no allegation of negligence; the cause of action was said to be the hazardous nature of the activity. But the invitation to generalise the rule was comprehensively rejected. The House of Lords stressed that the rule was primarily concerned with the rights and duties of occupiers of land. Escape from the defendant's land or control is an essential element of the tort.
(e) Personal injury
35. In some cases in the first half of the 20th century plaintiffs recovered damages under the rule for personal injury: Shiffman v St John of Jerusalem (Grand Priory in the British Realm of the Venerable Order of the Hospital)  1 All ER 557; Hale v Jennings Bros  1 All ER 579 are examples. But dicta in Read v J Lyons & Co Ltd cast doubt upon whether the rule protected anything beyond interests in land. Lord Macmillan (at pp 170-171) was clear that it had no application to personal injury and Lord Simonds (at p 180) was doubtful. But I think that the point is now settled by two recent decisions of the House of Lords: Cambridge Water Co v Eastern Counties Leather plc  AC 264, which decided that Rylands v Fletcher is a special form of nuisance and Hunter v Canary Wharf Ltd  AC 655, which decided that nuisance is a tort against land. It must, I think, follow that damages for personal injuries are not recoverable under the rule.
(f) Non-natural user
36. The principle in Rylands v Fletcher was widely expressed; the essence was the escape of something which the defendant had brought upon his land. Not surprisingly, attempts were immediately made to apply the rule in all kinds of situations far removed from the specific social problem of bursting reservoirs which had produced it. Leaks caused by a rat gnawing a hole in a wooden gutter-box (Carstairs v Taylor LR 6 Ex 217) were not at all what Blackburn J and Lord Cairns had had in mind. In some cases the attempt to invoke the rule was repelled by relying on Blackburn J's statement that the defendant must have brought whatever escaped onto his land "for his own purposes". This excluded claims by tenants that they had been damaged by escapes of water from plumbing installed for the benefit of the premises as whole. Another technique was to imply the claimant's consent to the existence of the accumulation. But the most generalized restriction was formulated by Lord Moulton in Rickards v Lothian  AC 263, 280:
37. The context in which Lord Moulton made this statement was a claim under Rylands v Fletcher for damage caused by damage to stock in a shop caused by an overflow of water from a wash-basin in a lavatory on a floor above. To exclude domestic use is understandable if one thinks of the rule as a principle for the allocation of costs; there is no enterprise of which the risk can be regarded as a cost which should be internalised. That would at least provide a fairly rational distinction. But the rather vague reference to "the ordinary use of the land" and in particular the reference to a use "proper for the general benefit of the community" has resulted in the rule being applied to some commercial enterprises but not others, the distinctions being sometimes very hard to explain.
38. In the Cambridge Water Co case  2 AC 264, 308-309 Lord Goff of Chieveley noted these difficulties but expressed the hope that it would be possible to give the distinction "a more recognisable basis of principle." The facts of that case, involving the storage of substantial quantities of chemicals on industrial premises, were in his opinion "an almost classic case of non-natural use". He thought that the restriction of liability to the foreseeable consequences of the escape would reduce the inclination of the courts to find other ways of limiting strict liability, such as extension of the concept of natural use.
Where stands the rule today?
39. I pause at this point to summarise the very limited circumstances to which the rule has been confined. First, it is a remedy for damage to land or interests in land. As there can be few properties in the country, commercial or domestic, which are not insured against damage by flood and the like, this means that disputes over the application of the rule will tend to be between property insurers and liability insurers. Secondly, it does not apply to works or enterprises authorised by statute. That means that it will usually have no application to really high risk activities. As Professor Simpson points out ( 13 J Leg Stud 225) the Bradfield Reservoir was built under statutory powers. In the absence of negligence, the occupiers whose lands had been inundated would have had no remedy. Thirdly, it is not particularly strict because it excludes liability when the escape is for the most common reasons, namely vandalism or unusual natural events. Fourthly, the cases in which there is an escape which is not attributable to an unusual natural event or the act of a third party will, by the same token, usually give rise to an inference of negligence. Fifthly, there is a broad and ill-defined exception for "natural" uses of land. It is perhaps not surprising that counsel could not find a reported case since the second world war in which anyone had succeeded in a claim under the rule. It is hard to escape the conclusion that the intellectual effort devoted to the rule by judges and writers over many years has brought forth a mouse.
Is it worth keeping?
40. In Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 a majority of the High Court of Australia lost patience with the pretensions and uncertainties of the rule and decided that it had been "absorbed" into the law of negligence. Your Lordships have been invited by the respondents to kill off the rule in England in similar fashion. It is said, first, that in its present attenuated form it serves little practical purpose; secondly, that its application is unacceptably vague ("an essentially unprincipled and ad hoc subjective determination" said the High Court (at p 540) in the Burnie case) and thirdly, that strict liability on social grounds is better left to statutory intervention.
41. There is considerable force in each of these points. It is hard to find any rational principle which explains the rule and its exceptions. In Read v J Lyons & Co Ltd  AC 156, 175 Lord Macmillan said with Scottish detachment "your Lordships are not called upon to rationalise the law of England" but in RHM Bakeries (Scotland) Ltd v Strathclyde Regional Council 1985 SC (HL) 17, 41 Lord Fraser of Tullybelton described the suggestion that the rule formed part of the law of Scotland as "a heresy which ought to be extirpated". And the proposition that strict liability is best left to statute receives support from the speech of Lord Goff of Chieveley in the Cambridge Water case  2 AC 264, 305:
42. An example of statutory strict liability close to home is section 209 of the Water Industry Act 1991:
This provision is designed to avoid all argument over which insurers should bear the loss. Liability is far stricter than under the rule in Rylands v Fletcher. There is no exception for acts of third parties or natural events. The undertaker is liable for an escape "however caused" and must insure accordingly. On the other hand, certain potential claimants like public gas suppliers (now called public gas transporters) must insure themselves. The irony of the present case is that if the leak had been from a high pressure water main, belonging to the North West Water Authority, a much more plausible high-risk activity, there could have been no dispute. Section 209(3)(b) would have excluded a statutory claim and the authority's statutory powers would have excluded the rule in Rylands v Fletcher.
43. But despite the strength of these arguments, I do not think it would be consistent with the judicial function of your Lordships' House to abolish the rule. It has been part of English law for nearly 150 years and despite a searching examination by Lord Goff of Chieveley in the Cambridge Water case  2 AC 264, 308, there was no suggestion in his speech that it could or should be abolished. I think that would be too radical a step to take.
44. It remains, however, if not to rationalise the law of England, at least to introduce greater certainty into the concept of natural user which is in issue in this case. In order to do so, I think it must be frankly acknowledged that little assistance can be obtained from the kinds of user which Lord Cairns must be assumed to have regarded as "non-natural" in Rylands v Fletcher itself. They are, as Lord Goff of Chieveley said in the Cambridge Water case  2 AC 264, 308, "redolent of a different age". So nothing can be made of the anomaly that one of the illustrations of the rule given by Blackburn J is cattle trespass. Whatever Blackburn J and Lord Cairns may have meant by "natural", the law was set on a different course by the opinion of Lord Moulton in Rickards v Lothian  AC 263 and the question of what is a natural use of land or, (the converse) a use creating an increased risk, must be judged by contemporary standards.
45. Two features of contemporary society seem to me to be relevant. First, the extension of statutory regulation to a number of activities, such as discharge of water (section 209 of the Water Industry Act 1991) pollution by the escape of waste (section 73(6) of the Environmental Protection Act 1990) and radio-active matter (section 7 of the Nuclear Installations Act 1965). It may have to be considered whether these and similar provisions create an exhaustive code of liability for a particular form of escape which excludes the rule in Rylands v Fletcher.
46. Secondly, so far as the rule does have a residuary role to play, it must be borne in mind that it is concerned only with damage to property and that insurance against various forms of damage to property is extremely common. A useful guide in deciding whether the risk has been created by a "non-natural" user of land is therefore to ask whether the damage which eventuated was something against which the occupier could reasonably be 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. The present substantial litigation over £100,000 should be a warning to anyone seeking to rely on an esoteric cause of action to shift a commonplace insured risk.
47. In the present case, I am willing to assume that if the risk arose from a "non-natural user" of the council's land, all the other elements of the tort were satisfied. Transco complains of expense having to be undertaken to avoid damage to its gas pipe; I am willing to assume that if damage to the pipe would have been actionable, the expense incurred in avoiding that damage would have been recoverable. I also willing to assume that Transco's easement which entitled it to maintain its pipe in the embankment and receive support from the soil was a sufficient proprietary interest to enable it to sue in nuisance and therefore, by analogy, under the rule in Rylands v Fletcher. Although the council, as owner of Hollow End Towers, was no doubt under a statutory duty to provide its occupiers with water, it had no statutory duty or authority to build that particular tower block and it is therefore not suggested that the pipe was laid pursuant to statutory powers so as to exclude the rule. So the question is whether the risk came within the rule.