The polluter pays - but who is the polluter?
In the first of a new series of articles addressing key Questions of Law affecting the environmental and waste sector, LAWE has invited co-authors Jonathan Ely, Solicitor, & Neil Toner, Partner, of Lewis Silkin, to comment on the "Circular Facilities Case" which has important implications for local authorities
A brave new regime to tackle contaminated land was promised by Part IIA of the Environmental Protection Act 1990. In particular it was heralded as being based on the "polluter pays" principle. However, five years after coming into force, it is still uncertain who the legislation sees as being the "polluter". A new case has gone some way to bring clarity to the issue.
The enforcing authority - usually the local authority - is required to identify "Appropriate Persons" liable to carry out or pay for remediation. In the first instance, this is anyone who "caused or knowingly permitted the contaminating substances to be in, on or under the land". You might assume, on the polluter pays principle, that this was intended to catch the person who placed the contaminants in the ground. However, the scope of the legislation is wider than that, as the new case confirms.
The Circular Facilities Case
The case, Circular Facilities (London) Limited v Sevenoaks District Council, concerned a landfill site. Clay pits had been dug on the site and during the 1960s and 1970s, while Mr Kinchen-Goldsmith and later Mr and Mrs Scott owned the site, these were infilled with waste.
In 1979, Circular Facilities bought the site. Forming an informal partnership with Circular Facilities, Mr Scott took on the responsibility of developing houses on the site. As part of the planning process, Mr Scott submitted a soil investigation report to the planners. It indicated the presence of black organic matter on site and gases bubbling through the soil. No measures were taken to remove or contain the waste when the houses were built.
After the legislation came into force in 2000, the council concluded that the gases presented a danger and served a remediation notice on Circular Facilities, as a "knowing permitter", requiring measures to be taken to vent the gases and aerate the soil. Whilst the council and Circular Facilities argued over liability, the council carried out the works themselves and sent the bill to Circular Facilities.
Circular Facilities appealed against the remediation notice. It argued that, for a number of reasons, it should not be liable to carry out any remediation or to pick up the tab. The case was heard by the Magistrates Court.
Circular Facilities argued that the "Appropriate Persons", should be those who allowed the infilling to take place in the first place - not it. Further, Circular Facilities argued that it was not aware of the presence of the organic waste, having relied on Mr Scott to develop the site.
The magistrates did not agree, deciding that Circular Facilities must have considered the report while it was assessing investment risks and therefore must have known its contents. The magistrates said that Circular Facilities could have commissioned its own risk assessment, and should have taken necessary measures to resolve any problem regarding the waste and gases. The magistrates held that Circular Facilities' failure to deal with the gases meant that it had "knowingly permitted" their presence and was therefore caught as an Appropriate Person. It was not necessary for Circular Facilities to have actually introduced the contaminants. Knowing that they were there and not doing anything about it was sufficient.
Circular Facilities might have hoped that at worst they would have to share that liability with Mr Kinchen-Goldsmith and the Scotts, who owned the site when the waste was deposited. However, the magistrates found Circular Facilities to be solely liable.
The legislation provides that once the list of relevant persons is established, the local authority must run a series of "exclusionary tests" to narrow the field of those who have liability.
The magistrates' view was that the situation became dangerous because houses had been built on the site by Circular Facilities. Whilst others might have known or caused the presence of the waste it was Circular Facilities who subsequently introduced the "pathway" between the waste and people - by constructing houses. The court therefore decided that both the Scotts and Mr Kinchen-Goldsmith should be excluded from liability.
Circular Facilities recently appealed to the High Court, and were partially successful. The High Court concluded that that it had not been established that Circular Facilities had sufficient knowledge of presence of the organic waste and the gases. The High Court ordered that, because of these gaps, there should be a re-trial.
Importantly, the High Court accepted that the fact that the report was available on the planning register was not enough to impute knowledge of the contents of the report to Circular Facilities.
The High Court decision rested on the particular facts so does not provide any firm indication that the regime will develop along the lines set out in the Magistrates Court decision. However, the case does illustrate that someone can be found liable even if they did not introduce the contaminants.
The Magistrates Court gave "knowingly permitted" a broad interpretation, and strongly indicated that the statutory guidance and exclusion tests would be followed strictly. It is unlikely that appeal courts and courts in other cases would depart from this approach.