The case of Transco v Stockport 2003 is very important as it represents the most recent and arguably, only attempt, to analyse the rule (“the Rule”) in Rylands v Fletcher (1868) LR 1 Exch 265 and consider its relevance to the modern world. Indeed their Lordships considered whether the rule has any applicability in today’s world against the backdrop of a decision by an Australian court to abolish the rule.
The House of Lords did bring the rule up to date by setting out some parameters so far as it could and being contemplative in other respects. The problems arise when their Lordships espouse their reasonings and make some obiter comments, as there is some confusion and disharmony in their respective judgments. It is important to note that in this case, their Lordships, undertook a synopsis of the development and evolution of the Rule allowing them to modernise and clarify its application. The Rule and its application have evolved in tandem with the changing society.
Probably the basis of the Rule is that formulated by Blackburn J in Rylands v Fletcher when he said that “a person who for his own purposes brings onto his land and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and if he does not do so, is. …answerable for all damage which is the natural consequence of its escape. The use of the land must amount to a non-natural use”. This original definition is very wide and could open the floodgates but in the Transco case Lord Bingham said that the rule in Rylands v Fletcher is engaged only where the defendant’s use is shown to be extraordinary and unusual. This reiterated Lord Moulton’s view in Rickards v Lothian 1913 AC 820, ”It must be some special use bringing with it increased danger to others and must not merely be the ordinary use of the land or such a use as is proper for the benefit of the community”. Lord Bingham did disagree with Lord Moulton in one respect namely that “little help is gained (and unnecessary confusion perhaps caused) by considering whether the use is proper for the general benefit of the community”. Lord Walker and Lord Scott agreed with Lord Bingham’s observations in this respect. In addition to requiring a non-natural use of land, Lord Bingham also requires that the thing, which was accumulated and escaped, was a “dangerous or mischievous thing”. This additional criterion is then defined in terms of giving rise to an “exceptionally high risk” of danger or mischief. Lord Bingham admits that the “dangerous or mischievous thing” cannot be viewed in isolation from the “non-natural user”, but Lord Hoffman compresses the “exceptional risk element” into the definition of “non-natural user”, and Lord Walker stated that “non-natural user” and “ dangerous substance” are best understood if taken together. It does seem more sensible if these conditions are taken together as it assists in separating the “ordinary” and “extraordinary” in terms of the risk factor posed to neighbours if the substance is not contained.
Their lordships acknowledged that 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. It is thus not possible to create an exhaustive list of non-natural users as this depends on the values accepted by society at any given time so this does not lead to any great certainty as to whether the Rule might apply. As Lord Bingham said “has the defendant done something which he recognises, or ought to recognise, as being quite out of the ordinary in the place and at the time when he does it”. Lord Hoffman went on to say that liability can be imposed even if the defendant “could not reasonably have foreseen there would be an escape”.
Lord Hoffman then extends his view to say that whether the claimant could reasonably be expected to have insured against the damage was a determining factor in deciding whether the defendant’s use of the land was “non-natural”. His opinion is beyond the pale and was lambasted as “unsound” by Lord Hobhouse. Every potential claimant could not be expected to make an assessment as to potential neighbouring dangers that might escape onto his land and damage his property and take out appropriate insurance cover. Where is the justice involved in potential claimants paying the insurance premiums?
In Rylands v Fletcher, there is no indication whether the claimant needs to have a proprietary interest in the land affected by the escape. The Transco decision confirmed that the remedy is for damage to land or interests in land and the claimant must have a sufficient “property interest” in land (per Lord Bingham) which has been adversely affected by an escape of a dangerous thing.
Shortly after Rylands v Fletcher, Blackburn J said that in the absence of negligence, damage caused by operations authorised by statute is not compensatable unless the statute expressly so provides. In Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430 Blackburn J said “It is now thoroughly well established that no action will lie for doing that which the legislature has authorised, if it be done without negligence, although it does occasion damage to anyone”. It was acknowledged that the application of the rule in Rylands v Fletcher did not apply to works constructed or conducted under statutory authority. In Transco it was confirmed that the Rule does not apply to works or enterprises authorised by statute. They concluded that the Rule would have no application to very high-risk activities since most hazardous activities (particularly those controlling the environment) are regulated by statute which lays down the incidences and scope of liability thus making it imperative for insurance to be taken out to cover the loss or damage.
When first laid down, it was said that the Rule imposed strict liability, but in fact the rule is not particularly strict because it excludes liability when the escape is for the most common of reasons, namely vandalism (third party), or unusual natural events (acts of God). However perhaps this is a reflection of our times that there is a greater preponderance of acts of vandalism. In Transco, Lord Hobhouse attempted to state the position, “It is…the creation of a recognisable risk to other landowners…. But once such a risk has been established, the liability for the foreseeable consequences or failure to control and confine is strict”. This has not clarified the issue of “fault” although Lord Hobhouse’s statement does seem to imply that the occupier should be aware of the consequences of the failure to contain the “risk” and this may encourage him to cover the risk through insurance. It is clear that defendant will only be liable for the foreseeable consequences and this is similar to the remedy in the tort of nuisance in which the Rule has its roots although their lordships agreed that the Rule is a form of tort liability and does not depend an any duty involved by one person to another.
In Transco the judges decided unanimously that the supply of water for domestic purposes in large pipes, which were not maintained at high pressure, was outside the scope of the Rule, as this did not amount to a non-natural use of land.
It could be argued that the Rule is being preserved for nostalgic rather than any practical reasons. However, it is not the case that the Rule should be deemed obsolete because it has been rarely used in recent times, but rather there should be an acknowledgement that it is not as relevant to modern society as it was in the nineteenth century. It is difficult to create a new list of events or circumstances in which Rylands v Fletcher will be invoked, but it is likely that the circumstances when it could be invoked are dwindling. The tendency for modern society is to regulate the way in which people undertake activities and EU legislation is also prevalent in setting down strict statutory regulations, which of course oust the Rule in Rylands v Fletcher. In addition, there is a greater tendency for people to take out insurance against unlikely but foreseeable events and this of course renders the Rule almost impotent, as any claim will be dealt with by the respective parties’ insurers. However just because the Rule has only been relied upon once since the second world war, does not mean that it should be consigned to the history books. Domestic and EU legislation cannot be held to encapsulate every possible scenario under which the Rule might be invoked.
In the Transco case, Lord Bingham commented obiter “…that the claim cannot include a claim for death or personal injury, since such claim does not relate to any right in or enjoyment of land”. As the Rule is limited to damage to physical property, then any case involving damage to personal property or personal injury or death will still have to rely on the law of negligence unless any statute sets out the remedies and of course the Rule is not applicable. The implicit assertion by a number of their lordships that when contemplating overruling a rule of law we should ask whether the Rule imposes liability in cases where it would not otherwise exist” seems misguided. Their concern that the Rule might allow for more compensation than provided for elsewhere is not a consideration when creating a rule of law so it does not seem a credible argument for abandoning a rule. However, sentimentality apart, the Rule probably is worth preserving for those isolated, local or individual cases that are not regulated by statute. Its applicability may be curtailed but it remains a useful concept in common law which could still have some relevance for albeit rare cases where statute does not have a regulatory part to play in issues of environmental protection.
C Turner, S Hodge, “Unlocking Torts”, 2004