Re Celtic Extraction Ltd ((in Liquidation))
| Jurisdiction | England & Wales |
| Judge | Lord Justice Morritt,Mr. Justice Rattee,Lord Justice Roch |
| Judgment Date | 14 July 1999 |
| Judgment citation (vLex) | [1999] EWCA Crim J0714-2 |
| Docket Number | Case No: CHANI 1999/0314 & 5/3 |
| Court | Court of Appeal (Criminal Division) |
| Date | 14 July 1999 |
[1999] EWCA Crim J0714-2
Lord Justice Roch
Lord Justice Morritt
and
Mr. Justice Rattee
Case No: CHANI 1999/0314 & 5/3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CHANCERY DIVISION)
ON APPEAL FROM MR. JUSTICE NEUBERGER
Royal Courts of Justice
Strand, London, WC2A 2LL
MR. R. RITCHIE (instructed by Treasury Solicitor) appeared on behalf of the Appellants
MR. R. KAYE QC and MR. S. MOVERLEY-SMITH (instructed by Environment Agency) appeared on behalf of the Respondents
These appeals raise two questions: (1) Is a Waste Management Licence granted under the Environment Protection Act 1990 (" EPA") "property" within the meaning of that word as defined in s.436 Insolvency Act 1986? and if so (2) If it is onerous is the Liquidator or trustee in bankruptcy of the holder of the Waste Management Licence entitled to disclaim it pursuant to s.178 Insolvency Act 1986? In Re Mineral Resources Ltd [1999] 1 AER 746 Neuberger J answered the first question in the affirmative and the second in the negative. By orders made on 11th March 1999 Neuberger J applied his decision in Re Mineral Resources Ltd, without further argument, to the applications for directions whether to disclaim such licences made by the Official Receiver as liquidator of Celtic Extraction Ltd ("Celtic") and Bluestone Chemicals Ltd ("Bluestone"). These are the appeals of the Official Receiver as such liquidator. Though the appeals are in form appeals from the judge's orders made on 11th March 1999 in substance they are appeals against his judgment in Re Mineral Resources Ltd. The Official Receiver submits that the judge was right on the first point but wrong on the second. The respondent, the Environment Agency ("the Agency"), seeks to uphold the judge's order on the second point and on the alternative ground that he was wrong on the first point so that it is immaterial whether he was right or wrong on the second point.
The relevant facts may be shortly stated. I will refer first to those relating to Celtic. On 7th May 1992 Lliw Valley Borough Council granted to Max Recovery (Holdings) Ltd under the Control of Pollution Act 1974 a waste disposal licence relating to parcel nos 2932, 2709, 3817 and 4335 being part of Gwenlais Fawr Farm, Capel Road, Pontlliw, Swansea ("the Celtic Site"). The form of deposit to which it related was as a landfill site and the types of waste of which the deposit was authorised were topsoil, subsoil, brickwork, stone, concrete, clay, sand, silica (excluding finely powdered materials) and glass. On 11th December 1992 an identical licence ("the Celtic Licence") was granted by Lliw Valley Borough Council to Celtic by way of transfer of the licence formerly granted to Max Recovery (Holdings) Ltd. The Celtic Licence contains 42 paragraphs setting out in detail the conditions to be observed in the use of the Celtic Site as a landfill site in accordance with the Celtic Licence. By a lease dated 10th February 1993 and made between David Williams (1) and Celtic (2) Mr Williams demised the Celtic Site to Celtic for a term of 15 years from 25th March 1987 at a peppercorn rent. Celtic covenanted to use the site as a refuse tip only and in strict compliance with the provisions of the lease and of the Celtic Licence.
When the EPA came into force the Celtic Licence became a site licence for the purposes of that Act. (s.77(2)) By order made on 30th June 1998 Celtic was put into compulsory liquidation and the Official Receiver became the liquidator. On 10th August 1998 the Official Receiver received from the Agency a notice issued under s.42(5)(a) EPA specifying 8 breaches of the conditions of the Celtic Licence and requiring remedial steps to be taken within 21 days. Having remedied the matters complained of, on 15th September 1998 the Official Receiver wrote to the Agency explaining that Celtic had no assets and asking the Agency to terminate the licence. On 24th September 1998 the Official Receiver gave notice under s.178 Insolvency Act 1986 to disclaim the lease. By a letter dated 11th December 1998 the Agency explained that their statutory powers to terminate the Celtic Licence were not, in the circumstances, exercisable. On 11th March 1999 the Official Receiver applied to the Companies Court for directions whether he could and should disclaim the Celtic Licence. In his statement in support of the application he explained that the only assets of Celtic are book debts of £8,863 charged to the Bank to secure a debt of £6,161; the liabilities amount to £232,975. The total cost of the remedial work to date is £3,020 which will have to be borne by the public purse.
Bluestone is the owner of freehold land at Redwither Road, Wrexham Industrial Estate, Wrexham, Clwyd ("the Bluestone Site"). On 17th January 1994 the Wrexham Maelor Borough Council granted Bluestone a waste disposal licence ("the Bluestone Licence") under Control of Pollution Act 1974 for the use of the Bluestone Site for storage and chemical treatment in respect of a number types of waste product. The conditions for the operation of the Bluestone Site contained in the Bluestone Licence are long, 32 pages, and very detailed. When the EPA came into force the Bluestone Licence became a site licence for the purposes of that Act. By an order made on 11th November 1998 Bluestone was put into compulsory liquidation and the Official Receiver became and is its liquidator.
The Bluestone Site is charged to National Westminster Bank plc to secure an outstanding debt of £441,662. On 30th November 1998 the Agency wrote to the Official Receiver indicating the routine and longer term measures required to be carried out on the Bluestone Site the cost of which, the Official Receiver has been advised, may come to £300,000. The Official Receiver has already incurred costs of £5,005 for which he cannot pay. The estimated deficiency with regard to creditors is £1,122,232. In those circumstances the Official Receiver applied to the court for directions similar to those he sought in the case of Celtic.
By his orders made on 11th March 1999 in the case of both Celtic and Bluestone Neuberger J directed that the Official Receiver could not disclaim the Celtic Licence or the Bluestone Licence. In doing so he applied his own previous decision in Re Mineral Resources. He recognised the public importance of the issues and gave the Official Receiver permission to appeal.
In the case of Wilmott Trading Ltd Neuberger J. has heard two further applications to which I should refer at this stage. In the first, Re Wilmott Trading No.1, in his judgment handed down on 31st March 1999 he concluded that a company which held a waste management licence might be dissolved notwithstanding that its liquidator could not disclaim it. In the second, Re Wilmott Trading Ltd No.2 ( The Times 17th June 1999), Neuberger J decided that on the dissolution of a corporate holder of a waste management licence such licence ceased to exist. Neither of these points is directly raised in these appeals.
Before considering the decision of Neuberger J in Re Mineral Resources and the arguments of counsel in support of and in opposition to his conclusions it is necessary to explain the relevant provisions of both the environment legislation and of the Insolvency Act 1986.
The Environment Legislation
Both the Celtic and the Bluestone Licences were originally granted under Control of Pollution Act 1974. By s.3 of that Act it was an offence for any person to deposit waste on land unless the land was occupied by the holder of a licence granted under s.5 and then only if the conditions of such licence were observed. S.6 contained provisions supplementary to s.5 and permitted the licence to contain conditions as to its duration. By s.8(1) the holder might transfer the licence to another but subject to the approval of the relevant authority. By s.8(2) comparable provision was made for transmissions by operation of law.
On 15th July 1975 the European Commission made a Directive on Waste (75/442/EEC). In the recitals to the Directive the Commission recognised that the disparity in the treatment of the control of waste by member states affected the functioning of the common market and should be harmonised with the essential objective of the protection of human health and the environment against harmful effects of the collection, transport, treatment, storage and tipping of waste. It enunciated a principle of "polluter pays" and required member states to take the necessary measures. Naturally it did not go into any detail and, in particular, was silent as to the consequences of the insolvency of the polluter.
The EPA was enacted to give effect to the United Kingdom's obligations under the Directive. The relevant part is Part II dealing with Waste on Land. Section 33(1) provides that, subject to certain immaterial exceptions:
"..a person shall not -
(a)deposit controlled waste… in or on any land unless a Waste Management Licence authorising the deposit is in force and the deposit is in accordance with the licence;
(b)treat, keep or dispose of controlled waste… in or on any land… except under and in accordance with a Waste Management Licence…."
Section 33(1)(c) renders it illegal to keep or dispose of controlled waste "in a manner likely to cause pollution to the environment or harm to public health". Section 33(6) provides that:
"A person who contravenes sub-section (1) above or any condition of a waste management licence commits an offence."
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