The Environment Agency (Appellant) Paul Clark and Another (Respondents)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE SCOTT BAKER,LORD JUSTICE ROBERT WALKER,LORD JUSTICE HENRY,Lord Justice Robert Walker,Mr Justice Scott Baker |
| Judgment Date | 10 February 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0210-11 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CHANF 1999/1281/A3 |
| Date | 10 February 2000 |
[2000] EWCA Civ J0210-11
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(His Honour Judge Moseley QC)
Lord Justice Henry
Lord Justice Robert Walker and
Mr Justice Scott Baker
Case No: CHANF 1999/1281/A3
CHANI 1999/0885/3)
Mr Stephen Hockman QC & Mr Stephen Moverley-Smith (instructed by The Environment Agency for the Appellant)
Mr Stephen Davies (instructed by Messrs Palser Grossman for the Respondent)
1) These two appeals by the Environment Agency ('the Agency') are brought with his permission from decisions of His Honour Judge Moseley QC sitting as a Deputy High Court Judge of the Chancery Division on 5 July 1999 and 6 August 1999. On 5 July he held that the Agency required leave under Section 10 of the Insolvency Act 1986 ('the 1986 Act') to commence criminal proceedings against Rhondda Waste Disposal Limited (in administration) ('the Company') and leave to continue such proceedings under Section 11 of the same Act. On 6 August he refused leave. The issues on the appeals are whether (i) leave was required and (ii) if it was, the Judge was correct to refuse leave.
Factual Background
2) The case involves a landfill site operated by the Company at Nant-y-Gwyddon in the Rhondda Valley pursuant to a waste management licence issued by the Agency. The site, which occupies some 24 hectares, has been problematic for a number of years and has caused great concern to local residents. The Company is a limited company and is wholly owned by a local authority namely the Rhondda Cynon Taff County Borough Council ('the Council'). It was formed in furtherance of the Government's policy of taking waste management i.e. the collection, keeping and disposal of waste out of direct local authority control and putting it into the hands of arm's length companies. The site became operational in 1988 and was developed and originally operated by the then Rhondda Borough Council. In March 1995 that Council, which was prior to local government reorganisation in 1996 the relevant council, granted the Company a waste management licence. Thereafter the Company had the benefit and obligation of managing the site under the terms and conditions of the licence. The licence permits the disposal of up to 300,000 tonnes per annum of household, commercial and industrial waste, excluding special wastes, with a monthly maximum total of 25,000 tonnes. The Company's income derived mainly from waste disposal contracts with the Council although waste was also received from waste disposal contractors. The Company also managed, under contract, four civil amenity sites; this included the transportation and disposal of waste. Between March 1995 and December 1998 the site was operated on behalf of the Company by 3 C Waste Limited of Chester under a management consultancy services agreement. This agreement also provided for environmental and technical support, marketing financial and accounting services. It was terminated by 3 C on 18 December 1998.
3) In 1996 the Agency took over waste regulation responsibility for the site from the Rhondda Borough Council. Between then and March 1997 it received over 200 complaints from local residents about obnoxious odours from the site. This figure had risen to 1500 by March 1999. In December 1996 a formal warning was sent to the Company complaining about lack of adequate cover of the operational areas of the site leading to problems with odour and leachate production. There were some improvements, but the Agency regarded them as inadequate. Consequently, in January 1997 it modified the conditions of the licence and required:
(i) a technical review of the landfill gas and leachate management controls; and
(ii) cessation of the deposit of calcium sulphate filtercake which, when it reacted with other waste, produced foul smelling hydrogen sulphide gas.
4) The Company appealed against the second condition to the Secretary of State under Section 43 of the Environmental Protection Act 1990 (the EPA) but later withdrew the appeal following the technical review which identified significant levels of hydrogen sulphide gas generation within the site. The problem became worse rather than better. Local residents picketed the site and there were demonstrations.
5) On 9 July 1997 the Agency wrote expressing concern that pollution control equipment was not operating. On 11 July 1997 the Agency modified the licence conditions for a second time. This modification required:
(i) daily inspection of the integrity of the leachate collection and monitoring systems;
(ii) the instalment of a whole site landfill gas collection system so as to prevent the uncontrolled migration or venting of landfill gas, with a purpose designed flare system;
(iii) daily inspection of the integrity of the landfill gas collection and flaring systems.
6) On 21 July 1997 the Agency served an enforcement notice on the Company under Section 42(5) of the EPA requiring it to comply with the licence conditions. This was followed by an injunction in the High Court on 25 July 1997 to the same effect. That injunction apparently remains in force. Meanwhile the Agency had appointed consultants who reported in January 1998 that there were many deficiencies at the site and that the landfill gas and hydrogen sulphide, although well below a level likely to cause a danger to health, were the cause of unpleasant smells in the surrounding communities. On 8 May 1998 the Agency served a third notice of modification on the Company. This notice, which remains in force, requires:
(i) capping of the existing tip area with a gas barrier to prevent uncontrolled emission;
(ii) the design, construction and maintenance of a landfill gas management and control system, to be approved by the Agency;
(iii) air quality monitoring within the site boundaries;
(iv) a system of appropriate data storage and retrieval;
(v) financial provision, acceptable to the Agency, sufficient to discharge the obligation to provide air quality monitoring;
(vi) leachate management;
(vii) risk assessment to assess the performance of the liner system in the untipped area of leachate and gas management;
(viii) a moratorium on the deposit of waste in the untipped area until the liner system study is complete.
7) By a letter dated 24 December 1998 the Company sought an extension of time in which to appeal to the Secretary of State against the third modification. The normal period for appealing is six months. The appeal remains undetermined. It should be noted that the Company had been given six months to complete the modifications. Furthermore, the notice of modification specifically disapplied Section 43(4) of the EPA i.e. the terms of the modification are effective notwithstanding an undetermined appeal to the Secretary of State, and this has not been challenged by the Company. Just before the expiry of the six month period the Company wrote, on 26 October 1998, setting out the reasons why it was not going to be able to comply timeously with the modifications, saying that the work had been started and asking for an extension of the deadline. The Agency conducted a site inspection on 13 November. It showed the work had not progressed as promised. Most significantly capping, the most important of the modifications under the third variation, had not been effected. Consequently another enforcement notice was served requiring:
(i) capping by 31 March 1999;
(ii) a programme of air quality monitoring to be submitted by 28 February 1999;
(iii) meteorological monitoring by 28 February 1999.
8) On 23 December 1998 the directors of the Company petitioned for an administration order to be made in relation to the Company. On 19 January 1999 the Agency laid an information before the Llwynypia justices alleging contravention of the capping condition (condition 108) imposed by the third modification of the waste management licence. On 21 January 1999 an administration order was made by the High Court over the Company.
9) On 15 February 1999 the administrator applied to the Court for a direction whether the Agency required leave under Sections 10 and/or 11 of the 1986 Act to bring or continue criminal proceedings. After various adjournments, the application was eventually heard on 17 May 1999, judgment being given on 5 July 1999, holding that leave was required.
10) The administrator records that the Company has been in financial difficulty for some considerable time. For the accounting years ending 31 March the Company's post taxation results have been:
1996 —(£71,000)
1997 —£4,000
1998 —(£578,000)
11) Draft management accounts for the nine months to 31 December 1998 show a further loss of £304,000 on a turnover of £1, 221,600. The trading losses had caused erosion of the Company's reserves and consequently the Company could not finance the work necessary at the site to satisfy the Agency and meet the licence conditions. There was said to be a shortfall of about £1.6m. Matters went as far as the issue of a winding up petition that was due to be heard on 9 July 1998 but, following discussions, the Council agreed to provide £1.1m of the £1.6m needed to carry out the remedial work and the petition was withdrawn. The administrator says that after the works were commenced in September 1998 technical difficulties were encountered and the estimate of the money needed increased from £1.6m to £2.6m. It was this that led to the administration order.
The Legislation
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