Further clarity on the contaminated land regime
In the first case of its kind in the UK, the High Court has provided some important clarification on the operation of the statutory regime designed to impose liability for historic contamination and pollution. In England, Part 2a of the Environmental Protection Act 1990 (EPA) creates a statutory scheme for determining who is liable for meeting the costs of cleaning up contaminated land. A nearly identical scheme is set out in relation to Northern Ireland under the Waste and Contaminated Land (NI) Order 1997. Whilst the NI scheme is not yet in force, because it imposes retrospective liability for historic contamination its implications need to be carefully considered in anticipation of its coming into force.
The English case relates to a remediation notice that was served by the Environment Agency with regard to a site at St Leonard’s Court near Hatfield. Formerly a chemical works, the site is now a residential estate overlying a vast plume of ground water contamination which led to the closure of a number of public water supplies and restriction in the use of several others some twenty kilometres away from the site. In the early 1980’s, the site was owned by Redland Minerals Limited and was sold to Crest Nicholson Residential plc which subsequently developed the site. Prior to purchasing the site, Crest was made aware of contamination at the site by way of enquiries with the local council and also from information provided by Redland. Crest was aware of contamination on the site caused by two toxic chemicals, Bromate and Bromide, but in demolishing parts of the site made contamination worse since rainwater allowed the substances to infiltrate ground water.
A Remediation Notice was served on the site under Part 2a of the EPA in 2005 with both Redland and Crest being found liable to meet significant remediation costs. Redland and Crest appealed against the Notice and an Inspector appointed by the Secretary of State dismissed the appeal following a major inquiry. Redland and Crest then judicially reviewed the Secretary of State’s decision. The application for judicial review was dismissed by Mr Justice Sales in February 2010 and the decision of the inspector was upheld.
One of the principal issues considered by both the Inspector and the High Court was the extent of liability of Redland. Under Part 2a, a statutory exclusion from liability applies in circumstances where the seller of a contaminated site has “sold with information”. In very broad terms, where a seller provides information to a purchaser on the nature and extent of contamination at a site, or allows a purchaser to undertake its own investigations of a site, the seller of the site can then be excluded from any future liability. All such liability then falls upon the purchaser of the site. It is generally standard practice in property transactions involving contaminated or potentially contaminated land to insert “sold with information” clauses in order to transfer liability to purchasers or tenants on long leases of sites. In considering the application of the “sold with information” test, the Inspector and the High Court determined that Redlands liability for contamination at the site was only partially reduced because Crest was not fully aware of the extent of ground water contamination at the time of its purchase of the site. Information available at the time of the purchase and as a result of Crest’s own investigations, only established the presence of Bromide within the ground. However, Crest also had to take some responsibility for Bromide subsequently leaking into ground water due to their actions in demolishing the site and allowing infiltration of rain water.
Following these judgements some reconsideration of the effectiveness of the “sold with information” exclusion may need to be undertaken. The operation of the exclusion may well depend upon the factual circumstances of a particular transaction, the extent of knowledge and disclosure by the parties and what the parties might reasonably be expected to become aware of. St Leonard’s Court is a particularly extreme example of problems arising from contaminated land. However the principles that it establishes will need to be carefully considered both in the future transactions and perhaps in those where the “sold with information exclusion has already been relied upon.
For further information on issues raised in this article please contact Andrew Ryan, Head of Environment and Planning, Tel: +44 (0)28 9082 0527 or email, andrew.ryan@tughans.com