Landmark case under Contaminated Land Regime settled out of court
Background
The Regime is set out in Part IIA of the Environmental Protection Act 1990 (the "EPA 1990") and was brought into force on 1 April 2000 pursuant to The Contaminated Land (England) Regulations 2000.
Under 78A(2) of the EPA 1990, contaminated land is defined as being "any land which appears to the local authority in whose area it is situated to be in such a condition, by reason of substances in, on or under the land, that:
(a) significant harm is being caused or there is a significant possibility of such harm being caused; or
(b) pollution of controlled waters is being, or is likely to be, caused."
Harm means "harm to the health of living organisms or other interference with the ecological systems of which they form part and, in the case of man, includes harm to his property".
The majority of contaminated land issues will be dealt with by the relevant local authority ("LA"), which is under a duty to inspect its areas in order to identify any contaminated land. Certain types of contaminated land are required to be designated as "special sites" (for example, where contamination on land is likely to pollute drinking water supplies or where land has been used for the purification (including refining) of crude petroleum or of oil extracted from petroleum). In these cases the relevant regulator will be the Environment Agency ("EA").
In making determinations as to whether there is "contaminated land" in a specific area and whether "harm" exists the relevant LA is required to follow the statutory guidance contained in the DETR Circular 2/2000: Contaminated Land: Implementation of Part IIA of the Environmental Protection Act 1990.
The definitions of contaminated land and harm are based upon the principles of risk assessment. For the purposes of the guidance, "risk" is defined as the combination of:
(a) the probability, or frequency, of occurrence of a defined hazard (for example, exposure to a property of a substance with the potential to cause harm); and
(b) the magnitude (including the seriousness) of the consequences.
The guidance follows established approaches to risk assessment, including the concept of contaminant-pathway-receptor, otherwise known as source-pathway-target.
The relevant LA must demonstrate that there is a "significant pollutant linkage", namely that:
- there is a source (for example, contaminants present on a site);
- there is a target (for example, a residential site nearby or an underlying aquifer);
- there is a pathway from the source to the target (for example, migration of landfill gas or migration of contamination via groundwater); and
- as a result of the source-pathway-target linkage, significant harm is being caused (or there is a significant possibility of such harm being caused) or water pollution is being caused (or is likely to be caused).
Harm is assessed by reference to the land's current use (such as industrial, commercial, residential and so on). The mere presence of contaminants on a site does not necessarily mean it will qualify as "contaminated land" for the purposes of the Regime.
If a LA identifies any contaminated land, it (or in the case of a special site, the EA) will be under a duty to serve a "remediation notice" on the appropriate persons requiring them to remediate the contamination, unless those persons are willing to carry out the remediation on a voluntary basis. Failure to comply with a remediation notice is a criminal offence punishable by a fine and/or imprisonment. Appeals against service of a remediation notice by a LA rest with the magistrates' court and appeals against those served by the EA rest with the Secretary of State.
For the purposes of Part IIA, "remediation" has a wider meaning than it has under its common usage. It includes assessment action, remedial treatment action, including preventative measures and monitoring action.
Liability for remediation rests with "appropriate persons" who need to be identified by the LA. In the first place, those who caused or knowingly permitted the contamination will be appropriate persons but where such persons are not identified, the owner or occupier for the time being of the contaminated land in question is an appropriate person, even if that person is not responsible for the contamination or was unaware of its existence. There are complex rules set out in the guidance which should be followed to determine the allocation of liability.
The LA/EA can in some circumstances carry out the remediation itself and recover the costs from the relevant appropriate persons (for example, where there is an imminent danger of serious harm or water pollution). In the Circular Facilities case, emergency action was required to be carried out by Sevenoaks District Council (the "Council") pending determination of an appeal lodged by Circular Facilities ("CF") against the service of the remediation notice, on the grounds that it was not an appropriate person. The Council attempted to recover its costs from CF.
The Circular Facilities Case
The case involved a housing development on a former brickworks site which was designated by the Council as contaminated land.
Investigations carried out by the Council indicated that material infilled in the 1960s-70s in former clay pits on the site was generating significant quantities of landfill gas (methane and carbon dioxide). The Council concluded that there was a significant possibility of significant harm being caused to the residents of the housing development, which had been constructed on the site by CF. It served a remediation notice on CF on the basis that CF had knowingly permitted the presence of the material/substances which had lead to the landfill gas.
CF appealed against the remediation notice to the magistrates' court on the grounds that it was not an appropriate person for the purposes of the regime.
Ownership of the site had changed hands twice since the 1960s-70s, when Owner 1 had infilled the former clay pits. Owner 1 sold the site to Owner 2 in 1978, who commissioned a site investigation report in 1978 which identified the presence of black organic matter and gases in the infilled pits. Owner 2 sold the site to CF in 1979. CF commenced redevelopment of the site in 1980, with the last house being sold in 1985.
A copy of the site investigation report was sent to the Council in 1980, either by CF or someone acting on CF's behalf (presumably as part of the process of obtaining the requisite building regulations consents). The Council therefore argued that CF must have been aware, in 1980, of the existence of the report and therefore of the presence of the contaminating material, black organic matter and gases, in the infilled pits. By virtue of section 78F(9) of the EPA 1990, if a person caused or knowingly permitted a contaminant to be in the land then that person shall be treated as having caused or knowingly permitted any other substance which results from a chemical reaction or biological process with that contaminant. As such, the Council argued that CF had also knowingly permitted the generation of the landfill gas.
The Council argued that any other causers or knowing permitters (namely, Owner 1 and Owner 2) were excluded from liability as appropriate persons under the Regime by virtue of one of the exclusion tests set out in the statutory guidance. Exclusion test 6 titled "Introduction of pathways or receptors" (set out in Part 5 of Chapter D of the statutory guidance) enables a person to be excluded from liability if the pathway or receptor in the relevant significant pollutant linkage was introduced by another person. The Council argued that although Owner 1 and Owner 2 may have caused or knowingly permitted the source, the pathway and receptor (that is, the residential housing and the occupants of the housing development) had been introduced subsequently by CF.
Pending determination of the appeal, the Council carried out emergency remediation on the site, intending to recover the costs from CF once the appeal had been determined.
The magistrates' court dismissed CF's appeal and held that CF must have been aware of the report and, therefore, of the existence of the contaminating material that led to the generation of the landfill gas.
CF appealed to the High Court, which held that the magistrates' court had not explained on what basis it had concluded that CF had been aware of the 1978 report, and ordered a retrial. CF's director and "controlling mind" had given evidence in the magistrates' court to the effect that he was not aware of the report until the Council had brought it to his attention in 2002-03. The High Court held that it was not clear how the magistrates' court had concluded that CF knew of the report if CF's director, its "controlling mind", did not.
The Out-of-Court Settlement
Since the High Court ordered the retrial, this case has settled out of court on a confidential basis. It has been reported, however, that the Council has withdrawn the remediation notice and there will, therefore, be no re-trial.
The reasons for the out-of-court settlement by the Council are believed to be purely financial. The remediation works have already been carried out by the Council pursuant to the emergency powers given to the Council under the Regime. This remediation occurred after CF had appealed but before the case had been heard by the magistrates' court and was felt necessary to avoid any harm being caused to residents of the site. The purpose of continuing with any further legal proceedings would, therefore, be to enable the Council to recover the remediation costs it incurred. The Council is reported to have taken the view that the costs involved with continuing with such legal action added to the remediation costs already incurred would have outweighed the costs capable of being recovered if the Council won any retrial. This is a case where the Council faces uncertainty in respect of the outcome of a retrial and being able to prove CF had the requisite knowledge of an appropriate person.
Generally, the Regime appears to be fraught with difficulties. Lack of resources and technical expertise on the part of LAs to enable them to identify land as contaminated, together with difficulties faced by LAs in ascertaining who caused or knowingly permitted the contamination, particularly where the contamination occurred decades ago, are prevalent. Add these difficulties to the uncertainty faced by LAs in being able to recover costs expended in carrying out remediation works themselves and you have a situation where Councils may not be willing to use the Regime at all.
In the absence of using the Regime to address contaminated land issues, it is reported that LAs may tend to use the planning regime, as part of the redevelopment of brownfield sites, to address problems with contaminated land. Any encouragement aimed at relevant appropriate persons to carry out voluntary remediation in order to avoid the stigma and blight associated with their land being formally designated as contaminated under the Regime and a remediation notice served may be halted by virtue of the fact that LAs, as a result of the Circular Facilities case, may be more wary of taking formal action under the Regime than they were already. If land is not designated as contaminated and remediation notices are not served, voluntary remediation falls away.
