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Unexpected liability for contaminated land
You might think that it would be safe to allow a statutory body such as the local authority onto your land to carry out potentially contaminating activities (such as landfill), on the basis that they will always be around to take responsibility for their activities.
However, a recent Court of Appeal decision involving Powys County Council (Powys) has highlighted that where there are changes to statutory bodies, such as local authorities or utility companies, liability for polluting acts will not necessarily be transferred to the successor body.
The predecessor local authority to Powys had operated a landfill site on a farm in Wales until 1992. They had then carried out works to restore the site and bring it back into agricultural use. Following local government changes, Powys became the successor local authority.
Powys then continued to monitor the site, operating on it a treatment infiltration plant and pumping station for nitrate, as it believed that it was responsible under the contaminated land regime for any potential contamination caused by its predecessor body. However, in 2015, Powys removed the treatment system and stopped monitoring the site. Powys claimed that, having reviewed its position, it was not responsible for any privately- owned landfill site where landfill operations had ceased before it became the relevant authority.
Unfortunately for the owners of the farm, the Court of Appeal agreed. Under the contaminated land regime, liability is imposed in the first instance on those who caused or knowingly permitted the contaminating substances to be present on the land. These are referred to as “Class A Persons”. If no Class A Person can be found, liability passes to the current owner or occupier of the land, regardless of whether that person was aware of the contamination.
The Court of Appeal has held that only the original person who actually caused or knowingly permitted the contamination can be a Class A Person. This does not include any successor body to a statutory body, unless the legislation transferring the liabilities from the previous body to its successor contains very clear wording transferring future, as well as existing, liability. The 1996 legislation which had created Powys County Council had not contained clear enough wording to transfer liability.
Whilst this decision gives a great deal of comfort to local authorities, it is less comfortable for landowners who have allowed local councils or other statutory bodies to operate on their land. In particular, anybody considering buying potentially contaminated land from a local authority, or allowing one to carry out operations on their land, would be wise to insist that the local authority backs up any environmental indemnities or clean-up obligations with insurance. The aim is to avoid being left ‘holding the baby’ because of poorly worded legislation next time there is a change in local authority structures.
Chambers-rated partner Susie Wynne handles a wide range of commercial property matters. Her experience includes portfolio management and investment work for major high street names, telecommunications sites, large scale property finance and renewables. She is described as “diligent” and “efficient”.