This case concerned contamination of land that had been the site of a gas works operated by National Grid. National Grid was known previously under many guises. In particular: Transco plc; British Gas plc: British Gas Corporation; and East Midlands Gas Board. The land had been sold and developed for housing before the contamination was discovered.
The Environmental Agency decided that National Grid was an "appropriate person" within Part IIA of the Environmental Protection Act 1990 (EPA) in respect of the contamination, thereby making National Grid liable for a proportion of the costs of remediating the contamination in question.
National Grid argued that it was not an "appropriate person" and that the Environment Agency's decision was wrong in law because:
1 Transco did not itself cause or knowingly permit the contamination in question;
2 There was no existing liability at the time of transfer from East Midlands Gas Board to British Gas Corporation (pursuant to the Gas Act 1972) or British Gas Corporation to British Gas plc (pursuant to the Gas Act 1986); and
3 Even if there was such liability under any of the statutory regimes, the Gas Acts could not operate so as to transfer liability under the EPA because such liability only arose under a statutory regime that was not in existence at the times of the transfers.
The court held that the provisions of the EPA should be given a purposive construction. Parliament's intention was that primary responsibility for the contamination should rest on the original polluter. In normal cases where the company responsible for the contamination had been dissolved and its assets sold or distributed to other persons, the original polluter could not be found. However, this was not the case in this instance, where assets, rights and liabilities were transferred under a clear chain of statutory provisions, which ensured continuity. Accordingly, the EPA imposed liability upon National Grid in relation to land contaminated by its predecessors.
The court further held that where at the time of the relevant transfers the transferring company or body had undertaken activities which had resulted in a situation where contaminating substances were caused to be present on the site, this was in itself sufficient to give rise to liability on the part of that company or body under the EPC, once those provisions were enacted and had come into force. In other words, the transferee would assume the exposure of the transferor to future liability relating to past actions of the transferor. It was immaterial whether such liability resulted from legislation already in force, or that which might be enacted in future.
*Full case details
High Court of Justice (Queen's Bench Division), The Honourable Mr Justice Forbes  EWHC 1083 (Admin)
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
This is interesting decision for many privatised industries. In essence, statutory liability for contamination should pass to and be borne by a body's statutory successor in title. It is essential therefore that greater due diligence and risk analysis is undertaken.