Another contaminated land liability stream for developers to contend with

Posted by Ronan Daffey on
"Caused or knowingly permitted" under the Contaminated Land Regime.

Developers are geared up to carry out necessary remediation of brownfield sites through the planning process, but they can now seemingly get caught out if they comply with all planning conditions and yet some form of historical contamination is subsequently found to be present on the land that they sold off to individual homeowners years before.

While the Secretary of State for the Environment, Food and Rural Affairs has recently quashed a remediation notice served on a developer under the little-used Part 2A of the Environmental Protection Act 1990 by Walsall Metropolitan Borough Council, this was only on the technical ground that Walsall hadn't carried out the necessary scientific tests to identify the land as contaminated in the statutory sense.

In the Secretary of State's decision letter, light has importantly been shed on the thorny question of when a party can be saddled with liability for remediation as having "knowingly permitted" the contamination even though, due to Walsall's failings, there was no legal need to identify an "appropriate person" to carry out the remediation.

Looking at the circumstances that led to the statutory intervention, Jim2, the developer, bought the site from the West Midlands Gas Board and built a housing estate on the land having carried out no decontamination, and subsequently sold off the individual housing units to homeowners. The site had been used as a gasworks until 1957, and subsequently as a gasholder, but we are unfortunately not told when Jim2 bought it or sold it off. All we are told is that Walsall first identified the site as contaminated in 2007, in accordance (or not in accordance, as it turned out) with the relevant 2006 guidance, and that it eventually served a remediation notice on Jim2, and only Jim2, on 27th March 2012, against which Jim2 has successfully appealed on the technical ground. In its decision letter, the Secretary of State commented on whether Jim2's appeal on other grounds would have been upheld, and this is what should concern developers.

The inspector decided, and the Secretary of State agreed, that Jim2 had not caused the contamination simply by moving soil around and infilling during its groundworks before the houses were built, and that Walsall's finding to the contrary had been unreasonable.

On the question of whether it had knowingly permitted the contamination, however, Jim2 was held to have known of the presence of the identified contaminant and to have had the opportunity to remediate the area, including an undeveloped area that it sold off to another developer. As it had chosen not to do so, it had knowingly permitted the contamination to be present, giving it primary liability to clean up the site rather than the default liability that affects "innocent" landowners when no primarily liable person can be found.

On the equally important question as to whether the Gas Board and E Fletcher Ltd. (the developer to which Jim2 sold off part of the site) should share liability with Jim2 the inspector decided, and again the Secretary of State agreed, that the Gas Board (which no longer existed anyway) was not liable as it had not created any pathways from and not introduced any receptors to the contaminant, both essential elements in land being statutorily defined as contaminated. E Fletcher Ltd. was dissolved following notice from Walsall that it was being looked at as a potentially liable person so we are left hanging on that point, but logically it would have been liable for the same reasons that Jim2 was, that it knew about the contamination and did nothing about it when it could have done so.

The most worrying, and possibly controversial, aspect of this decision is that the Gas Board, which undoubtedly introduced the identified contaminant to the site during the course of its use of the land and would therefore be regarded by the man or woman in the street as the polluter, was held not to have any liability because it was not responsible for creating pathways or introducing receptors to the land. That is likely to be true of all the historically heavy polluters whose activities ordinarily took place in the absence of vulnerable receptors so, if the decision needs to be made in anger in the future, the question will hopefully be scrutinised in a more purposive way to avoid riding roughshod over the "polluter pays" principle on which the environmental legislation was predicated.

It means, though, that anybody buying or leasing land from a known polluter must currently address the issue of contamination comprehensively and clearly in the contract.

DEFRA decision letter dated 5th April 2017 re. Land at Stonegate Housing Estate, Willenhall, West Midlands.

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Ronan is responsible for keeping the firm’s Real Estate team fee earners up to date with legal developments.

Ronan Daffey
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