Contaminated Land ?? Buyer and Seller Beware

The Secretary of State has recently published one of the most significant contaminated land decisions, upholding on appeal the original remediation notice issued by the Environment Agency against Redland Minerals Limited ('Redland') and Crest Nicholson ('Crest').  The implementation of Part 3 of the 2000 Drinking Water Regulations in December 2003 formed the backdrop to the notices' issue.  In preparation for their implementation, Thames Water began testing its bromate levels.  The monitoring of groundwater contamination included a site at St Leonard’s Court which, in 2002, was determined as contaminated land.  Chemicals (both bromate and bromide) were found to have leached into the ground water sources at the site, providing both the source and pathway for the pollutant linkage.

In November 2005, both Redland and Crest were served with a remediation notice requiring the contaminated land to be cleaned up.  The cause of the contamination was undisputed.  The land had been the site of a former chemical works which had manufactured substances containing bromine between 1955 and 1980.  Redland later acquired the company who had operated the chemical works.  In 1983, Redland sold the land to Crest, who built 66 dwellings on the site.

Both parties appealed on the basis that the other should be solely liable for the clean up costs.  The Secretary of State dismissed the appeals, holding Redland responsible for causing the contamination to be present on the land (a Class A party) and Crest, being aware of the contamination and having not done enough to remediate it, were also deemed liable for its cause (again a Class A party).  Liability was apportioned between Redland and Crest in the ratios 85:15 for bromate contamination, and 45:55 for bromide contamination.

Crest experienced first hand the potential pitfalls of an appeal, as its liability for the clean up costs was actually increased.  Redland had attempted to avoid liability by arguing that the 'sold with information' exclusion test applied.  The Secretary of State determined that Redland's liability could not fully be excluded as not enough information had been provided to Crest.  The decision, instead of resolving the issue of how much information is required to qualify for full exclusion from liability, simply serves to highlight the complexities of that issue.

The decision will do little to comfort those selling and buying land where contamination is/is likely to be present, given previous land usage - especially when one considers that the contamination at St Leonard's Court is thought to have occurred at some point between 1955 and 1980.  Two key lessons must be learned from the misfortune of the present parties - sell with as much information as to contamination as possible and adequately provide for liability apportionment in sale and purchase agreements.  Also, by failing to consider the appropriateness of environmental insurance, a person risks being levied with a clean-up bill far in excess of the actual value of the land.

 Ashfords LLP is regulated by the Solicitors Regulation Authority. The information in this note is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.