Sally Challinor, a solicitor at Keystone Law who specialises in commercial property and the environment, considers where the recent Court of Appeal decision (in the case of Powys Country Council v Price and another [2017] EWCA Civ 1133) leaves landowners?

Some things are inevitable. Death and taxes are regularly cited as examples of dire certainties. Rain during a British summer is perhaps less of a certainty, but an acknowledged probability.

Certainty at law remains an aspiration for any engaged individual, but especially for those persons (corporate or otherwise) faced with the unenviable task of environmental clean-up. Environmental liability in the context of this brief missive concentrates solely on the contaminated land regime (CLR) governed by Part 2A of the Environmental Protection Act 1990 (EPA 1990).

I appreciate that the CLR is old news and appetite to consider it has dwindled in recent years. This lack of fervour may be attributable to the withdrawal of local authority funding for its enforcement. However, sustainability for business is of increasing significance.

Any real estate owned or utilised by a business is a major component of determining sustainability credentials. If a real estate asset is land contaminated within the meaning of the CLR, regardless of any designation of such by the enforcing authority, it is unlikely to win any sustainability brownie points without some further action. The action might, or probably will, be its remediation under the planning regime so that the land can be utilised for the future.

To this extent then, the CLR remains as relevant today as it was when enacted in 1995 (in force in Wales from 2001) if only to focus minds on (1) whether a land asset has long term viability (for use and/or investment), (2) if remediation is needed to initiate that vision, and (3) who should be responsible for its remediation? Of course, the CLR was intended to bring about remediation of contaminated land that causes an unacceptable level of risk. Liability for remediation is imposed on “appropriate persons”.

A landowner might be an appropriate person either as a Class A person (one who caused or knowingly permitted the contaminating substances to be present in, on or under the land) or as a Class B person (only if no Class A person can be “found”). A class B person is merely the current owner or occupier of the site (even if it was not aware of the contamination). A Class A person cannot be “found” if they are no longer alive or, in the case of a company, if it has been dissolved.

But what about statutory successors to the now non-existent Class A person (the Original Polluter)? Following the 2007 House of Lords’ decision in R (on the application of National Grid Gas, formerly Transco Plc) v Environment Agency [2007] 1 WLR 318 the position was as certain as any that successors were not responsible under the CLR for clean-up of contamination caused by predecessors. This decision meant that Powys County Council (Powys), a statutory successor to a borough who had operated a landfill site until 1992 (on land now owned by Mr Price and Ms Hardwicke) could exhale.

Until the Transco case, Powys had taken the view that it was responsible under the CLR for any contamination caused by its predecessors. Powys had monitored the site and operated a filtration and treatment plant with pumping station for leachate since 2001. In 2015, Powys had a change of heart and claimed that following the Transco case it did not regard itself liable for the landfill site operated by its predecessor. Even though the land had not been identified as contaminated land, Price and Hardwicke were concerned that the land might be designated as contaminated in the future. Consequently, they sought a declaration that Powys would be an “appropriate person” under the CLR. Such an action could be regarded not only to protect against liability, but to get Powys on board with any future remediation. In short, Mr Price and Ms Hardwicke were protecting their land and farm business asset.

The Court of Appeal (CA) in July 2017 followed Transco on a number of grounds, but principally it has been made clear there was no evidence on the facts that Powys should be saddled with liability under a law enacted after the past conduct of its predecessor. The predecessor had operated the landfill site until 1992. Powys was not created as successor until 1996. The CLR did not come into force in Wales until 2001.

The CA’s decision will be of great relief to local authorities as successors to historic landfill operations, but the wider message is that unless there is very clear wording to the contrary, successors will not be liable for the acts of their predecessors under the CLR. This determination will bring relief to the ever-stretched public purse. It will also inevitably provide comfort to successors in the private sector, which is good news for the shareholders (many of whom will also be the public where shares in privatised utility companies are concerned). One thing is clear however, if not certain; actual or potential landowners of land contaminated by historic acts by historic entities (with or without successors) are more likely than not to be left holding the baby for remediation.

This will need to be factored into sustainability costs as much as any other development expenses. It remains to be seen if the new designations for brownfield sites under The Town and Country Planning (Brownfield Land Register) Regulations 2017 (SI 2017/403) – to be published by 31 December 2017— will include those previously operated as landfill by historic entities.

It will also be interesting to evaluate to what extent a local planning authority may bestow a benefit (perhaps reduced CIL?) where land was contaminated by its predecessors. In light of the CA’s decision in Powys, they are under no obligation to do so — unless there is some unequivocal and unambiguous indication to the contrary.

That much is certain or at least as certain as it gets.