(Exchequer Chamber, 1866) L.R. 1. Ex. 265.

Background
John Rylands constructed a reservoir on land he was renting to supply water to his steam-powered textile mill. Thomas Fletcher operated mines on nearby land and had tunnelled up to old disused mines which were under the land where Rylands' reservoir was located. Both parties rented land from Lord Wilton and both were engaged in lawful uses of the land. The lands were in Lancashire, in an area known for its mines. Rylands employed independent contractors and engineers to do the work of building the reservoir which was completed in December 1860. While excavating the construction site, the contractors came across some disused mine shafts which had been loosely filled with marl and soil. No attempt was made to seal these shafts. These shafts actually led, via a series of interconnected shafts and tunnels, into Fletcher's mines and land. Water from Rylands' reservoir flooded into Fletcher's mines on 11 December 1860, just days after completion of the reservoir and after it had been partially filled. There had been no excessive rains or local floods. Fletcher sued Rylands.

The case went through four Courts of increasing status, starting in the local Court of Liverpool Assizes (Summer Session) in 1861.

The Liverpool Court found in favour of the Plaintiff Fletcher on the basis of trespass and nuisance. Actions in the torts of nuisance and trespass were only available to those with a legal interest in land. Rylands successfully gained an order for the matter to be heard by the Court of Exchequer before three judges where the previous decision was overturned with two judges deciding for the Defendant Rylands. The decision was based on trespass requiring direct human involvement in the invasion of an interest (the quiet enjoyment of land), which required intent or negligence, and Rylands had been engaged in a reasonable and lawful act, with no ill-intent or negligence, and there was no nuisance as there is nothing offensive to the senses about water. Some legal commentators interpret this as a case of the victim being the one to bear the cost of the accident.

Fletcher took the matter to the Court of Appeal, being the Exchequer Chamber of six judges, in 1866 (L.R. 1 Ex. 265). The prior decision was overturned in favour of the appellant Fletcher. Justice Colin Blackburn spoke on behalf of all the judges and said,

"We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape. He can excuse himself by shewing that the escape was owing to the Plaintiff’s default; or perhaps, that the escape was the consequence of vis major, or the act of God; but as nothing of this sort exits here, it is unnecessary to inquire what excuse would be sufficient."

This ruling relied on the liability for damages to land available through the tort of cattle trespass and the tort of nuisance, as well as the in scienter action, injury by a domesticated animal known to have a disposition to injure.

Rylands appealed to the House of Lords which dismissed the appeal and agreed with the determination for Fletcher, in 1868 (L.R. 3 H.L. 330). Lord Cairns, in speaking for the House of Lords, stated their agreement of the rule stated above by Justice Blackburn, but added a further limitation on liability, which is that the land from which the escape occurs must have been modified in a way which would be considered non-natural, unusual or inappropriate.

The torts being argued in the case were torts relating to the enjoyment of land, available to land owners (and lawful land users), and the most available outcomes from judgment were injunctions to stop the activity and / or payment of damages for injury to land. Damages for personal injury, or economic injury are other legal developments.

The issue before the Court was whether the doctrine of strict liability could be applied to inherently dangerous activities in the same way is was applied in nuisance and cattle trespass. Trespass was considered not to be an available cause of action as this requires a direct invasion of an interest (land, goods or person) by a person, and by 1860, for trespass to succeed, there was the need to prove culpability in the form of negligence or wilful intent. Fletcher argued that the doctrine of strict liability should be applied, that the peaceful enjoyment (i.e. interest) in his land had been invaded and Rylands should be liable for the damages caused by his inherently dangerous activity (that is, collecting a dangerous amount of water on his land which then "escaped" into the mine). Rylands argued that he was acting reasonably and lawfully on his land and thus should not be held responsible for a simple accident which resulted without any negligence or wilfulness on his part.