Ashfords Solicitors - Recent Case Law Developments in Contaminated Land

The High Court has recently ruled that National Grid Gas PLC (NGG) is liable under the Environmental Protection Act 1990 (EPA) contaminated land regime for contamination caused by its statutory predecessors. This has implications not just for other former gasworks, of which there are approximately two thousand across the country but also for other privatised businesses that may have inherited contaminated land including water, power, telecoms and railway companies.

In R (on the application of National Grid Gas plc) v Environment Agency (17 May 2006) NGG challenged the Environment Agency (EA) decision that NGG was liable for remediating contaminated land that it had inherited on the privatisation of the gas industry. Although NGG had not caused the contamination, its predecessors had.

A resident of a housing estate in Bawtry discovered a pit filled with coal tar in his garden, the housing estate had been built on a former gasworks. In 2003, the land was designated as contaminated under the EPA contaminated land regime; it was also classed as a special site which meant regulatory control passed form the local authority to the EA.

Those responsible for remediation of contaminated land are 'appropriate persons'. Appropriate persons are, in the first instance, those who 'caused or knowingly permitted' the contamination (class A); where such persons cannot be found, the owners or occupiers of the land (class B).

The EA identified two 'knowing permitters', one of the redevelopers of the site and NGG on the basis that it was liable for the acts of its statutory predecessors. The redeveloper had been dissolved and so could not be 'found', consequently the EA served a remediation notice on NGG requiring it to remediate the contamination. The EA carried out the remediation work itself, then sought to recover costs from NGG.

NGG sought leave to apply for judicial review of the EA's decision on the grounds that it did not itself cause the contamination and so was not an appropriate person and the normal rules on corporate personality should apply. NGG argued that the EPA's reference to 'person' should be construed as a reference to the undertaking which actually caused or permitted the contamination; NGG is a separate legal entity from its predecessors and so should not be liable for their actions. NGG submitted that the relevant gas transfer schemes transferred only those liabilities which had already crystallised at the time of the transfer and therefore did not apply to any potential or contingent liabilities which crystallised later under subsequent legislation (e.g. the EPA).

The High Court dismissed NGG's application and concluded that parliament, in accordance with the 'polluter pays principle' intended responsibility for remediation to rest with the polluter, and where assets, rights and liabilities transfer under a clear chain of statutory provisions which ensure continuity, the term 'appropriate person' includes not only the original polluter but also its statutory successors. The High Court held that the relevant gas transfer schemes strongly indicated that there should be a seamless transition of liabilities between the various legal entities and therefore NGG had succeeded to the liabilities of the original undertaking.

The relevant gas transfer schemes had transferred to NGG both existing and contingent liabilities accrued by its statutory predecessors. Liability under Part IIA of the EPA is retrospective and so can apply to contamination caused prior to those statutory provisions coming into force. It was, therefore, not necessary to demonstrate that at the time the contamination was caused the relevant predecessor had already incurred liability in respect of contamination under the then applicable legislation.

Note that the High Court gave NGG leave to appeal its decision to the House of Lords. NGG has indicated it intends to do so.

Circular Facilities

The High Court ruled on whether a magistrates' court (District Judge) had been correct to hold a developer (Circular Facilities (London) Ltd) to be the class A appropriate person and therefore responsible for remediation because it knowingly permitted contamination to be on a site contaminated decades ago by previous owners. The previous owners were excluded from liability owing to the application of complex rules on liability and exclusions (essentially no 'significant pollution linkage' until Circular Facilities introduced the housing).

The court over turned the magistrates' court decision and ordered a re-trial because the DJ had not made findings as to what the controlling mind had or had not known and on what basis knowledge of others had been imputed to the controlling mind of Circular Facilities.

Recently the local authority, Sevenoaks D.C., has agreed to settle the matter out of court. The terms of the settlement are confidential, however, the local authority is reported to have indicated that this was a financial decision because the legal costs outweigh the costs of remediation. As part of the settlement the local authority has withdrawn the remediation notice.

The outcome of this may be that, owing to the likelihood and cost of legal challenges to their decisions, local authorities are even less likely to take formal action under Part IIA of the EPA than they were previously, good news for land owners and developers.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article 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.

28th June 2006

Recent Case Law Developments in Contaminated Land

Introduction