Circular Facilities (London) Ltd v Sevenoaks District Council

Factual and Procedural Background

This appeal to the High Court arises from a decision of a Magistrates' Court under Regulation 13 of the Contaminated Land (England) Regulations 2000. Permission to appeal out of time was granted by Judge Collins on 17th February 2005. The case concerns the first appeal to reach the High Court under Part IIA of the Environmental Protection Act 1990 relating to a remediation notice served by a local authority on contaminated land.

Sevenoaks District Council (the Council) served a remediation notice dated 5th November 2002 on Circular Facilities (London) Limited (CFL), identifying CFL as an "appropriate person" under the 1990 Act for causing or knowingly permitting substances contaminating the land at a site in Well Close, Leigh, Tonbridge, Kent.

The Council had previously identified the land as contaminated and concluded that there was an immediate danger of serious harm due to substances in or under the land. The Council, as the enforcing authority, was under a statutory duty to remediate contaminated land within its area pursuant to section 78E of the Environmental Protection Act 1990.

Environmental investigations during 2002 and 2003 revealed significant concentrations of methane and carbon dioxide gases at the site, produced by decomposing organic matter beneath the land. The pathway for these contaminants to reach receptors was identified as service entry points and cracks in the concrete slab floors of houses developed by CFL in the early 1980s.

The statutory definition of contaminated land under section 78A(2) of the 1990 Act was not disputed by the parties regarding the land's contaminated status. The issue on appeal focused on whether the Council and the District Judge were correct in determining that CFL was an appropriate person who caused or knowingly permitted the contaminating substances to be present.

The site history began with planning permission granted in 1965 to infill clay pits with inert material. Subsequent planning permissions and land transfers occurred, culminating in CFL acquiring the land in November 1979 and developing it in the early 1980s. A soil investigation report dated 14th July 1978 disclosed the presence of a black organic layer beneath the fill, including organic matter and gases bubbling through water in trial pits.

The Council argued that CFL, as owner and developer at the time of development, must have known of the organic material due to the soil report being submitted to the Council in March 1980 and therefore had knowingly permitted the substances under section 78F(9) of the 1990 Act, which imputes liability for substances resulting from chemical or biological processes affecting an original substance.

CFL disputed knowledge of the organic material, with evidence from its controlling mind, Mr Ketteringham, who stated he did not see the soil report until around 2002 and was unaware of the infill and organic matter during the development period. The Council relied on the relationship between Mr Ketteringham and Mr Scott, the latter having managed the development and possibly submitted the soil report as CFL’s agent or partner.

The District Judge found that Mr Ketteringham was the controlling mind of CFL, that there was an informal partnership or agency relationship with Mr Scott, and that CFL must have been aware of the organic material and associated risks. The Judge concluded CFL was a responsible person under section 78F of the Act for the contamination and had knowingly permitted the presence of the substances.

Legal Issues Presented

1. Whether the District Judge's finding that CFL knew of the presence of buried organic material or gases between 1979 and 1985 was valid.
2. Whether knowledge of the soil investigation report’s contents was sufficient to establish that CFL knowingly permitted the substances to be present on the land.
3. Whether the policy of the Environmental Protection Act 1990 supports holding developers liable for contamination arising from substances on the land.

Arguments of the Parties

Appellant's Arguments

• The controlling mind of CFL, Mr Ketteringham, denied knowledge of the organic material or the soil investigation report until many years after development.
• The relationship between Mr Ketteringham and Mr Scott did not clearly establish that CFL had knowledge of the contamination at the relevant time.
• The District Judge failed to make clear factual findings on who possessed the requisite knowledge and did not adequately explain the basis for imputing knowledge to CFL.
• The legal basis for imputing Mr Scott’s knowledge to CFL was not properly explored or established.
• The submission that "knowingly permitted" requires knowledge of potential harm was advanced, arguing that some awareness of the risk posed by the substances is necessary.

Respondent's Arguments

• The soil investigation report was submitted to the Council in March 1980, and it is implausible that CFL, through its controlling mind or agent, did not know of its contents.
• The presence of black organic matter and gases was confirmed by the report, which dictated the use of piled foundations, indicating awareness of contamination risks.
• The informal partnership or agency relationship between Mr Ketteringham and Mr Scott fixed CFL with knowledge of the contamination.
• The policy of the Act supports holding developers liable for contamination arising on their sites.
• Knowledge of the substance alone suffices under section 78F(9); knowledge of the potential chemical or biological processes causing contamination is not required.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
El Ajou v Dollar Land Holdings plc and Another [1994] 2 All ER 685	Definition and application of the "directing mind and will" principle in attributing knowledge to a company through different persons responsible for various activities.	The court acknowledged the principle but noted it was not investigated or considered as a basis for dismissing the appeal in this case.

Court's Reasoning and Analysis

The court analyzed whether CFL, through its controlling mind or agents, had the requisite knowledge of the organic substances contaminating the land at the relevant time. It noted the District Judge’s conclusion that CFL must have been aware of the organic material and associated risks was not clearly supported by explicit factual findings regarding who possessed such knowledge.

The court observed that Mr Ketteringham denied knowledge of the contamination and that the Judge did not explicitly reject this evidence or explain the basis for concluding otherwise. The agency or partnership relationship between Mr Scott and Mr Ketteringham was considered but not clearly established as a legal basis for imputing knowledge to CFL.

The court recognized that under section 78F(9) of the Environmental Protection Act 1990, knowledge of the original substance suffices to impose liability for substances resulting from chemical or biological processes affecting that substance. The court rejected the argument that knowledge of potential harm is required.

Given the evidential and legal uncertainties, the court concluded that the matter should be re-tried to allow a fuller exploration of the facts and legal principles, including the question of knowledge and agency.

Holding and Implications

The court ALLOWED THE APPEAL and remitted the case for a re-trial.

The direct effect of this decision is that the previous determination that CFL was an appropriate person liable under the remediation notice is set aside pending a new trial. No new precedent was established, but the judgment clarifies the necessity for clear factual findings on knowledge and the legal basis for imputing knowledge to companies in contaminated land cases under the Environmental Protection Act 1990.