Feature: PartIIA and Circular Facilities case shows that care must be taken over liability for remediation
Part IIA of the Environmental Protection Act 1990 imposes modified joint and several liability on persons who caused or knowingly permitted a site to be "contaminated land". If an enforcing authority cannot find such a person after a reasonable inquiry, the owner or occupier of the land is liable due to his status as an owner or occupier.Joint and several liability
Part IIA imposes modified joint and several liability by the application of six tests that exclude specified Class A "appropriate persons" from liability, resulting in the Class A persons who remain in the liability group assuming the liability of the excluded persons. The assumption of liability by the persons who remain depends on the test.
Tests 2 and 3 ("payments made for remediation" and "sold with information") transfer the excluded person's liability to the person who agreed to remediate the land or the purchaser of the land, respectively. Tests 1, 4, 5 and 6 ("excluded activities", "changes to substances", "escaped substances" and "introduction of pathways of receptors") transfer liability to all of the persons who remain in the liability group.
If only one person remains in the group after the tests have been applied, that person is solely liable for remediating the contamination. If more than one person remains, liability is apportioned between them according to criteria set out in statutory guidance to Part IIA.
The purpose of the exclusion tests is to transfer liability for remediating contaminated land to the most recent person who "knowingly permitted" the contamination to remain on the land. The application of the exclusion tests was demonstrated in Circular Facilities (London) Ltd v. Sevenoaks District Council, the only case to be litigated under Part IIA.
The case involves a developer, Circular Facilities (London) Ltd ("CF"), which built eight houses on a site near Tonbridge, Kent, in the early 1980s. The site contained several clay pits. CF purchased the site after a former owner had cut down the vegetation covering the site and deposited it in the pits. The vegetation, onto which clean fill was subsequently deposited, continued to decompose resulting in the generation of methane and carbon dioxide.
A geotechnical report was submitted, on behalf of CF, to the planning authority. The report identified the presence in a trial pit on the site of "[b]lack organic matter with bricks, roots, iris leaves and plastic sheeting. Water entering excavation at this level and gasses bubbling through it".
During the 1990s, Sevenoaks District Council ("Council") identified the threat posed by the gases to the houses and their occupants during a survey conducted with Kent County Council. In order to alleviate the threat, the Council paid for protection measures for each house. The measures, however, proved to be inadequate.
Meanwhile, the Council continued to monitor the gases. In 2002, the Council concluded that the methane and carbon dioxide were causing a significant possibility of significant harm to "receptors", namely, the significant possibility of explosion or asphyxiation to the houses and their occupants, respectively. The Council, accordingly, made a determination that the site was "contaminated land" under Part IIA. The Council concluded that CF had "knowingly permitted" the vegetation and, thus the gases, to remain on the site during its development.
In November 2002, when CF had failed to remediate the contamination, the Council served a remediation notice requiring it to conduct the necessary works. The Council did not serve a remediation notice on the former owner of the site who had placed the vegetation in the pits because application of test 6 resulted in his exclusion from liability.
Test 6 provides that an enforcing authority must exclude any persons who remain in a liability group if another member of the group introduced a receptor (or pathway) that resulted in the site being contaminated land. As indicated above, CF introduced receptors in the form of houses and their occupants to the site.
In June 2004, District Judge Kelly of the Sevenoaks Magistrates Court concluded that CF is the appropriate person to pay for the remedial works at the site. Judge Kelly stated that the evidence suggested that the former owner of the site "was, at least in part, responsible for the landfill" but that he was satisfied that the Council had "complied with the statutory guidance as a result of which [the former owner] was excluded from the class of appropriate persons".
In May 2005, the High Court allowed CF's appeal on "[t]he validity of [the Magistrates Court's] finding that [CF] knew of the presence of the buried organic material or gasses" when it developed the site. The court did not consider Judge Kelly's conclusion that the Council properly excluded the former owner of the site from liability.
Circular Facilities demonstrates that a developer or another person may be liable and, in some cases, may be the only liable person, even if he did not introduce contaminants to a site.
Circular Facilities did not involve the potential liability of an owner or occupier of contaminated land (known as a Class B person). Part IIA expressly imposes "status" liability on such persons. That is, the owner or occupier of a site may be liable under Part IIA whether or not that person caused the contamination or even knew that the contamination existed.
Further, if the owner of a site is told or otherwise learns that his site is contaminated prior to an enforcing authority notifying him that the site is contaminated land under Part IIA, the owner may become a "knowing permitter" if he fails to remediate the contamination within a reasonable time.
In order to avoid liability under Part IIA, persons who purchase and develop land should take all appropriate measures to ensure that they have not inadvertently acquired contaminated land or otherwise become liable for its remediation. Measures to consider include conducting environmental due diligence and allocating on behalf of CF or transferring liability.
Visiting Professor, University of Ghent
Valerie advised Sevenoaks District Council in the above case. Her book, entitled Environmental Liabilities and Insurance in England and the United States, was published by Witherbys in April 2005.