Page 33 - Lawtext Utility Law Review Journal Sample

180 16[2006/2007]4 ULR
United Kingdom
edited by
Philippa Young,
Solicitor, Oxford
1 May – 31 July 2007
House of Lords decision –
contaminated land
27 June 2007
UTILITIES LAW REVIEW PUBLISHED BY LAWTEXT PUBLISHING LIMITED
UK CURRENT SURVEY
Current Survey
GENERAL
The House of Lords gave judgment on 27 June in a significant case on liability for cleaning up
contaminated land, unanimously rejecting the Environment Agency’s contentions that Natural
Grid Gas plc (‘NGG’) should be liable under Part 2A of the Environmental Protection Act
1990 for the cost of cleaning up land formerly used as a gas works site. In R (on the
application of National Grid Gas plc (formerly Transco plc)) v Environment Agency, National Grid
Gas plc successfully appealed the Court of Appeal decision that they were liable for the
remediation. National Grid Gas plc did not own the land, but it had been contaminated
with coal tar by predecessor companies The Bawtry and District Gas Company and The
South Yorkshire and Derbyshire Gas Company at some point between 1912 and 1965,
when the land was sold to a property development company. The case affects the application
of Part 2A of the EPA 1990 in relation to sites contaminated by a wide range of privatised
businesses, in particular utilities, that may have caused land to be contaminated and have
subsequently become subject to statutory reorganisation, nationalisation or privatisation.
The policy implications of the decision are far-reaching.
The House of Lords effectively ruled that when passing Part 2A in 1995, the then
Parliament did not intend that this retrospective liability would overreach the intent of the
Parliament at the time of the British Gas and other privatisations, which is likely to give rise
to considerable academic and constitutional debate. Where the transfer scheme or other
reorganisation took place prior to the implementation of Part 2A and did not clearly
contemplate transferring liabilities that arise after the vesting date, the House of Lords
decision confirms that developers or purchasers of such land, who may be liable as ‘knowing
permitters’, will not be able to rely on the successors of the original polluters to cover or
contribute to remediation costs. The issue of whether that type of successor company is a
‘person’ for the purposes of Part 2A also remains unresolved. Where the successor company
actually owned the land in question after vesting, there may be scope to argue that they
have become a ‘knowing permitter’ but this will very much depend on the facts of the
specific case. The key issue was whether NGG could be held liable for the acts of its
statutory predecessors. Neither of these companies remains in existence and in order to
establish whether NGG was an ‘appropriate person’ under Part 2A and therefore liable to
fund the remediation costs, the House of Lords considered the following questions:
• Is the concept of ‘appropriate person’ wide enough to cover statutory successors to
the original polluter?
• Had any Part 2A liability of the original polluters passed down to NGG as a result of
statutory transfers of liability?
Lord Scott of Foscote dismissed the Environment Agency’s contention that ‘appropriate
person’ under the EPA 1990 would extend to cover statutory successors. The Environment
Agency invited the House of Lords to review the parliamentary record to establish whether
Parliament intended Part 2A to extend to successor companies, but the Lords declined on
the basis that it was only necessary where ambiguity existed in the legislation, and it was
not accepted that there was any ambiguity in the language of Part 2A. Lord Neuberger of
Abbotsbury was open to the possibility that in some circumstances it may be right to
extend the concept of ‘polluter pays’ beyond the original polluter. However, he noted that
this was a matter of policy for the legislature and not for the courts. The Lords also rejected
the Environment Agency’s arguments on the second issue of whether liability for remediation
had been transferred to NGG. Also mentioned in the Lords’ decision on this issue was that
the liabilities were being transferred to a public company in which the investing public were
invited to buy shares. The Lords considered that the investing public were entitled to
believe that the liabilities of the new company were as identified in the prospectus and
thereby limited to those existing immediately before the date of transfer. The issue of
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