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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Crest Nicholson Residential Ltd, R (on the application of) v Secretary of State for Environment, Food & Rural Affairs & Ors [2010] EWHC 561 (Admin) (03 February 2010)
URL: http://www.bailii.org/ew/cases/EWHC/Admin/2010/561.html
Cite as: [2011] Env LR 1, [2010] EWHC 561 (Admin)

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Neutral Citation Number: [2010] EWHC 561 (Admin)
Case Nos. CO/12147/2009, CO/12111/2009

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

Royal Courts of Justice
Strand
London WC2A 2LL
3 February 2010

B e f o r e :

MR JUSTICE SALES
____________________

Between:
THE QUEEN ON THE APPLICATION OF CREST NICHOLSON RESIDENTIAL LTD Claimant
v
SECRETARY OF STATE FOR ENVIRONMENT, FOOD AND RURAL AFFAIRS Defendant
ENVIRONMENT AGENCY First Interested Party
REDLAND MINERALS LTD Second Interested Party
THAMES WATER UTILITIES LTD Third Interested Party
VEOLIA WATER CENTRAL LTD Fourth Interested Party

____________________

Computer-Aided Transcript of the Stenograph Notes of
WordWave International Limited
A Merrill Communications Company
165 Fleet Street London EC4A 2DY
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)

____________________

Mr David Hart QC and Mr Joliffe (instructed by Norton Rose of London) appeared on behalf of the Claimant
Mr Maurici and Mr Lewis (instructed by Treasury Solicitor) appeared on behalf of the Defendant
Mr Harrison QC appeared on behalf of the First Interested Party
Mr Reed appeared on behalf of the Second Interested Party
Mr Jones and Mr Ormondroyd appeared on behalf of the Third Interested Party
Mr Hill QC appeared on behalf of the Fourth Interested Party

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    MR JUSTICE SALES:

  1. This is an oral hearing for the Claimant ("Crest") to apply for permission to bring judicial review proceedings to challenge a remediation notice made under Section 78E of the Environment Protection Act 1990 (as amended) ("the 1990 Act") issued against Crest in a revised form dated 22 July 2009 by the Secretary of State.
  2. The remediation notice relates to land at St Leonard's Court, Sandridge, Hertfordshire ("the Site"). The Site is contaminated by bromide and bromate in the soil which is entering the local water course. The notice identifies Crest as an "appropriate person" within the meaning of the 1990 Act and as liable to meet certain remedial costs -
  3. "by reason of having caused or knowingly permitted [bromide and bromate] by reason of which the contaminated land to which this notice relates is contaminated land, to be in, on or under that land."
  4. The notice requires Crest to undertake certain assessment actions and certain interim remedial treatment actions. The assessment actions relate to monitoring the impact of bromide and bromate in local water supplies. The interim remedial actions relate to contributions Crest is required to make to the cost of pumping and treatment of contaminated ground water by Veolia Water Central Ltd("Veolia", the local water supply company) and to the cost of disposing of such water by Thames Water Utilities Ltd("Thames Water", the local sewage company).
  5. The background to the application was helpfully summarised by Mr Hart QC, for Crest, in his opening. From the 1950s to about 1980 undertakings, which have now become part of the undertaking of Redland Minerals Ltd ("Redland"), carried on chemical production on the Site. The work was carried on in buildings erected on hardstanding on the Site. In the buildings there were sump holes used to collect the waste bromide and bromate generated by the chemical processes carried on there. All the bromide and bromate now at the Site derived from that period. There was an element of leakage into the soil at the Site during that period. The chemical works then ceased to operate.
  6. In due course Crest, a developer of residential properties, identified the Site as a potential development site. Crest carried out some testing of the Site and then acquired it from Redland in September 1983.
  7. In early 1984 Crest carried out some preliminary preparatory work on the Site. It demolished the existing buildings and broke up the hardstanding. However, no construction works were carried out for a period of two-and-a-half years after that, until the residential development was carried out in 1986 and 1987.
  8. In that two-and-a-half year period the Site was left exposed to the elements. The removal of buildings and hardstanding meant that rain had a greater effect in washing bromide and bromate down into the soil than would otherwise have been the case. This effect occurred across the Site, including in relation to the sumps, which leaked.
  9. Before Crest commenced development works in 1986 it excavated and disposed of a shallow layer of soil of between 1 to 1.5 metres depth across the Site and dug out the sumps. This was done in the hope of removing any soil contaminated with bromide. (At the time, as the inspector subsequently found, Crest did not appreciate that bromate might also be present in the soil and create problems.) Unfortunately, the excavations by Crest were too shallow and failed to remove all the contaminants in the soil at the Site. They had by then penetrated farther into the ground, in part because of the accelerated infiltration into the lower part of the ground at the Site caused by the greater exposure of the Site to rain as a result of the demolition of the buildings and hardstanding by Crest.
  10. Gradually, over time, the bromide and bromate which remained in the ground at the Site has worked its way down into the local water course and created a contamination effect in the water supplies drawn from that source.
  11. In about 1987 Crest sold off the land.
  12. The 1990 Act was amended by the Environment Act 1995 to introduce a regime (contained in Section 78A and following of the 1990 Act, as amended) requiring remedial works to be carried out in relation to contaminated land. The provisions came into effect on 1 April 2000.
  13. Section 78A(2) provides:
  14. "(2) 'Contaminated land' is any land which appears to the local authority in whose area it is situated to be in such a condition, by reason of substances in, on or under the land, that —
    (a) significant harm is being caused or there is a significant possibility of such harm being caused; or
    (b) pollution of controlled waters is being, or is likely to be, caused;
    ... "
  15. Section 78A(7) provides:
  16. "(7) 'Remediation' means —
    (a) the doing of anything for the purpose of assessing the condition of —
    (i) the contaminated land in question;
    (ii) any controlled waters affected by that land; or
    (iii) any land adjoining or adjacent to that land;
    (b) the doing of any works, the carrying out of any operations or the taking of any steps in relation to any such land or waters for the purpose —
    (i) of preventing or minimising, or remedying or mitigating the effects of, any significant harm, or any pollution of controlled waters, by reason of which the contaminated land is such land; or
    (ii) of restoring the land or waters to their former state; or
    (c) the making of subsequent inspections from time to time for the purpose of keeping under review the condition of the land or waters;
    and cognate expressions shall be construed accordingly."
  17. Section 78E of the 1990 Act (as amended) imposes a duty on an enforcing authority to require remediation works in respect of contaminated land. In this case, St Albans District Council made a decision dated 12 June 2002 that the site was contaminated land and referred the case to the Environment Agency to take enforcement action. It was then the responsibility of the Environment Agency, in the first instance, to issue a notice requiring appropriate persons to assume liability to carry out remedial works and to specify what those works should be.
  18. Section 78F of the 1990 Act (as amended) provides in relevant part as follows:
  19. "(1) This section has effect for the purpose of determining who is the appropriate person to bear responsibility for any particular thing which the enforcing authority determines is to be done by way of remediation in any particular case.
    (2) Subject to the following provisions of this section, any person, or any of the persons, who caused or knowingly permitted the substances, or any of the substances, by reason of which the contaminated land in question is such land to be in, on or under that land is an appropriate person.
    (3) A person shall only be an appropriate person by virtue of sub-section (2) above in relation to things which are to be done by way of remediation which are to any extent referable to substances which he caused or knowingly permitted to be present in, on or under the contaminated land in question.
    .....
    (10) A thing which is to be done by way of remediation may be regarded for the purposes of this Part as referable to the presence of any substance notwithstanding that the thing in question would not have to be done —
    (a) in consequence only of the presence of that substance in any quantity; or
    (b) in consequence only of the quantity of that substance which any particular person caused or knowingly permitted to be present."
  20. It is clear from these statutory provisions that "contaminated land" is only such if contaminated at the date it is determined to be such land – in this case, in 2002. It is also clear from Section 78F(2) that an appropriate person is someone who has caused or knowingly permitted the relevant substances which make that land at the time of the relevant determination "such land" (that is to say, contaminated land) to be in, on or under that land. Other parts of Section 78F make provision for a division of responsibility amongst multiple appropriate persons.
  21. In this case, the Environment Agency issued a remediation notice identifying both Redland and Crest as appropriate persons in respect of the site. They both appealed to the Secretary of State, who referred the appeal to an inspector to hold an inquiry and report. For present purposes, I focus on Crest's appeal in respect of its liability under the remediation notice.
  22. At the inquiry it was common ground on all sides that the particular relevant question in issue on this application was whether Crest had caused the bromide and bromate to be present in, on or under the land comprising the Site so as in fact to render that land "contaminated land" as at the date of the determination in 2002 that it was "contaminated land".
  23. At paragraphs 10 and following of the inspector's report ("the Report") the inspector carefully and accurately summarised the legislation which provided the framework for the issues he had to address. It is in my view abundantly clear that he had well in mind that he had to address the question of responsibility for the pollutants in, on or under the land comprising the Site as at the proper relevant time, not least because it is to dealing with the current pollution to which the remedial measures which he reviewed had to be addressed: I refer in that regard in particular to paragraphs 21 to 33 of the Report.
  24. In a long and full report, the inspector examined that issue, amongst others, with great care. In particular, it is relevant to set out the summary of part of Redland's submissions at the inquiry appearing at paragraphs 706 to 711 of the Report:
  25. "706. Crest's witness accepted that the removal of the hardstanding and buildings has meant that greater infiltration occurred than otherwise would have done. Whilst he maintained that there were insufficient data to quantify the movement of contaminants, he agreed that Crest's actions meant that contamination would be washed further into the soil below the land than would otherwise have been the case. Although he contended that the degree of movement, in the pore spaces, would be slow, he acknowledged that this was not the case in the fissure system (except in the case of small fissures, the number of which he was unaware) or in the gravels.
    707. Given that this contamination is washed downwards, it would constitute the uppermost layer, wherever it is washed down to. Consequently, to the extent that the land is now contaminated, it must derive in part from this washed-down contamination which is the last to leave the site.
    708. Had the buildings and hardstanding not been removed then, when it came to removal of the soil, this upper level of contamination would have been in greater concentrations and removed by the excavation. This was agreed by Crest's witness under cross-examination. Looked at in this way, as the witness acknowledged, it would be right to say that Crest's actions had caused contamination to be in the land that would not otherwise have been there. The [Environment Agency] also saw the 'logic' of this analysis.
    709. This is, of course, the analysis also undertaken by Redland's witness and expanded upon in her evidence in chief. As a result, it is quite clear that Crest caused the land to be contaminated land.
    710. It may be said, by Crest, that the extent of the contamination which they caused was only small. Even if right, the point is irrelevant. It is the substances that lead to the ascription of the land as contaminated land which are important, not the amount. So long as it is not de minimis, which Crest do not assert, the contamination caused by Crest must be taken into account. The issue of the amount of the contamination is only relevant if Crest are in the same … group as another Class A person.
    711. Consequently, as a result of either knowingly permitting the bromide contamination or causing a part of it, Crest are part of the Class A group [i.e. as an appropriate person for the purposes of liability under the remedial regime in the 1990 Act] for the bromide significant pollutant linkage."
  26. It is clear and wholly unsurprising that Redland was there addressing the question of the responsibility of Crest for the presence of contamination in the land comprising the Site at the relevant time at 2002 and onwards.
  27. The relevant parts of the inspector's conclusions in relation to this issue are at paragraphs 896 to 903 of the Report, headed "Did Crest cause contaminants to be present?" In the context of the inquiry and the Report, it is in my view clear that that question is addressed to the relevant proper time according to the statutory regime. I consider that none of the parties at the inquiry could have been in any serious doubt about that.
  28. In that section of the Report the inspector said this (the numbers in square brackets consist of cross references to other paragraphs in the Report):
  29. "Did Crest cause contaminants to be present?
    896. The issue is whether Crest caused bromide and/or bromate to be present in, on or under the land; not whether Crest caused these contaminants to enter the land. The test is therefore different to that under S.85 (1) of the Water Resources Act (1991) which concerns the entry of matter into controlled waters. To that extent, the findings in National Rivers Authority v Biffa Waste Services Ltd [1996] Env LR 227 have no bearing on my considerations. [29, 536, 705]
    897. As the Circular explains, the test here is whether Crest were involved in active operation(s), or failure(s) to act, to which the presence of contaminants is attributable.
    898. Housebuilders Crest purchased [the Site] in September 1983, aware of its past use and of the local planning authority's concern that residential use of the site might expose people to contaminated soil. They had been advised that some of the soil should be removed and knew that the quantity and quality of contaminated soil would determine the likelihood of it being accepted for local landfill. [68, 74, 457]
    899. In February of the following year, they were told that the site was particularly sensitive because of the risk to groundwater used for water supply. They were warned that exposing the soil to rainfall could mobilise contaminants whereas, up until that time, groundwater quality had been given some protection by roofs over the works buildings and by hardsurfaces elsewhere on the site. However, within a few weeks, they were demolishing the hardstanding and buildings, leaving the ground open to the leaching effects of infiltration. [90, 691]
    900. The purpose of that early demolition appears to have been financial. However, I believe that its environmental impact would have been substantial. For the first time since 1955, rainfall was allowed to percolate down through the waste collection sumps below the chemical production areas, thereby accelerating the movement of water soluble substances from these contamination hot spots into the aquifer. [57, 72, 90, 93, 692]
    901. Also, breaking up the concrete floor slabs would have let rainfall through to leach potential pollutants from the surface layers beneath. Prior to that, peak bromide levels had been found in borehole samples colleted from immediately below the slabs and laboratory tests had shown that high concentrations of this water soluble ion were readily extractable, despite the clay content of the surface soils. Only bromide had been tested for, but subsequent investigations showed that the highest concentrations of bromate were in broadly the same areas of the site as the highest bromide concentrations and, given the similarity of these ions' behaviour, it is reasonable to assume that bromate too would have migrated with surface water draining down through the unsaturated zone. [95, 173-174]
    902. These contaminated surface layers were left exposed to rainfall for about 2½ years and so, by the time they were excavated, some of their bromide and bromate content would have migrated down towards, and possibly into, the putty chalk. In addition, the sumps would probably have been acting as soakaways, thereby encouraging further leaching of the surrounding contaminants. It is not clear how much contamination escaped removal in this way but, whatever the amount was, it remained under the site when it would otherwise have been excavated for off-site disposal. To that extent, Crest caused some of the bromide and bromate to be present. [57, 93, 137, 471, 706-708]
    903. The potential for Crest's actions to have flushed the contaminants deeper into the ground is not in dispute. Whilst I recognise that some of the assumptions underlying Redland's flux calculations may be flawed, I see no reason to believe that the amount to have escaped removal would have been minimal, given the high concentrations that were found at the surface, the accumulations that would have built up around the sumps, and the mild conditions under which bromide was extracted in the laboratory tests. In any event the provisions of S.78F, and S.78F(10) in particular, would appear to indicate that the quantities involved are irrelevant to determination of who is an appropriate person. On that basis, I am led to conclude that Crest should be considered a Class A appropriate person for both bromide and bromate. [12, 95, 190, 485, 710]"
  30. It is of particular relevance to note the cross-reference in paragraph 902 to paragraphs 706 to 708 of the Report, set out above. In the context of the Report and the points being made in paragraphs 896 to 903, there is in my view no doubt that the inspector accepted Redland's argument as set out at paragraphs 706 to 708 of the Report.
  31. Mr Hart for Crest criticises the inspector's reasoning. He points to other parts of the Report (in particular paragraph 918) which indicate that there was movement of bromide and bromate over time, in particular in connection with the movement of water. He says that in paragraph 902 the inspector either failed to address the right question - because, Mr Hart submits, he only addressed the historical position up to the mid-1980s - or, alternatively, if he did address the right question, he failed to give proper reasons for his conclusion that Crest had "caused" the pollutants, which made the Site contaminated land in 2002, to be in the ground. He submitted that the inspector at paragraph 902 addressed only historical information and there was a gap in his reasoning to explain why it was that he concluded that Crest had caused contamination in the land in 2002.
  32. Mr Hart said that the same error was then carried through to the Secretary of State's decision letter, dated 22 July 2009, which adopted the inspector's reasoning on this point in rejecting Crest's appeal against liability in respect of the remediation notice. The relevant passage in the decision letter is at paragraphs 28 to 32, as follows:
  33. "28. The Secretary of State agrees with the Inspector's conclusions and finds that both Redland and Crest have been correctly identified as the members of the Class A liability group: IR [Inspector's Report]/891 - 895 and 937 - 938.
    29. The Secretary of State has not formally considered the question of whether either party knowingly permitted either contaminant to be in, on or under St Leonard's Court. Having found that both parties caused both contaminants, the test of 'knowingly permit' is superfluous when considering membership of the liability group in this case. However, the Secretary of State would have been minded to agree with the conclusions of the Inspector at IR904-936 as to why the test of 'knowingly permit' could also be considered to apply.
    30. In its representations Crest suggests that it cannot be considered to have 'caused' bromate or bromide because it did not cause either contaminant to enter the site. The Secretary of State considers this argument to be based upon a misunderstanding of the test of 'caused or knowingly permitted'. A party does not need to have introduced a contaminant to a site to have caused it to be in, on or under the land. Furthermore, paragraph 9.9 of Annex 2 of Circular 02/2000 clarifies that a party can be found to have caused contamination through both action and inaction. Crest as a result of action and inaction in the way it dealt with the site caused contaminants that would otherwise have been removed to remain and also caused contaminants to be flushed deeper and faster into the ground.
    31. Crest's representations also argue that it cannot be considered to have 'caused' either contaminant as it has not been demonstrated that any of the additional contamination resulting from Crest's actions was still present when St Leonard's Court was identified as being contaminated land. The Secretary of State does not accept this line of reasoning. Crest's actions affected the general body of contamination at the site (causing the contaminants to penetrate deeper and faster into the soil and underlying geology across the site). Moreover, there is no evidence that at the time of identification that entry of contamination into the aquifer had ceased and, as referred to in paragraph 19, the latest water monitoring data suggests that it is still ongoing to date.
    32. It is noted that the Environment Agency in serving the remediation notice did not consider that Crest caused bromate to be in, on or under St Leonard's Court (IR190). The Secretary of State, like the Inspector, having considered all the evidence takes a different view. Moreover, in response to the IR the Environment Agency asked the Secretary of State to proceed to determine the appeals 'in line with the conclusions and recommendations of the Inspector'."
  34. On the footing that there was a defect in the inspector's reasoning which was carried into the decision letter issued by the Secretary of State, Mr Hart said that permission should be given for judicial review of this decision and the remediation notice issued under it.
  35. I reject that submission. In my view, despite the volume of material in this case, Crest has not shown that it has a good arguable case that the inspector and the Secretary of State erred in law on this issue.
  36. I reach that view for three main reasons. First, in the context of the basic question which everyone at the inquiry understood the inspector to be addressing, the relevant part of the Report (in particular, paragraph 902) is clear. Historical events were plainly relevant to the determination because the inspector had to set out and address the causative mechanism by reference to which the Site came to be contaminated land in 2002 and continues to be such. In my view, the relevant passage in the Report was an entirely natural way for the inspector to express his view on that point. I consider that it is clear that he addressed the correct issue and that there is no gap in his reasoning on the point as suggested by Mr Hart.
  37. Secondly, the cross-reference in paragraph 902 to paragraphs 706 to 708 underlines and supports that interpretation of the Report. The inspector, in making that cross-reference, did not intimate in any way that he was rejecting the submission Redland had made. On the contrary, in my opinion, the natural reading of that cross-reference in the context of paragraph 902 is that he was indicating that he accepted that part of Redland's case. It is also relevant here to contrast the position he adopted where he disagreed with submissions to which he cross-referred in paragraph 903, in relation to which he spelled out the particular respects in which he disagreed with certain submissions which had been made by Crest to which he cross-referred.
  38. Thirdly, I consider that the report has to be read in the light of a common-sense approach to the causative mechanisms identified by the inspector. The whole Site was affected by Redland's activities and then the whole Site again was affected by the activities of Crest. No part of the Site was identified as being subject to any different causative effects. On the basis that Crest's activities caused bromide and bromate to be in the soil at the Site below its excavations in 1984, that was likely to be the case across the whole Site. There was no reason to think that there was any unusual or exceptional reason which would cause part of the contamination (i.e. some part of the contamination which might be regarded as solely attributable to Redland and in no way attributable to Crest) to remain in the ground while contamination to which Crest had contributed could have washed away before 2002.
  39. Given that the land comprising the Site was still contaminated, as observed by the Secretary of State in his decision letter, and that Crest had caused contamination to descend into the ground after Redland had made its contribution to depositing bromide and bromate in the ground, it was entirely natural to expect that Crest should be found to have caused contamination which was likely still to be in the ground. The inspector did not have to spell this out any more than he did. On no reasonable objective reading of the Report could there be any serious doubt that he had addressed the right question and given proper reasons for his conclusions. The same applies to the Secretary of State's decision letter.
  40. Accordingly I dismiss the application for permission.
  41. I should say for completeness that objections were taken by some of the interested parties to the grant of permission, on grounds of delay. I indicated my provisional view that had I thought that the case was an arguable case I would not have refused permission on grounds of delay. In the event, it has proved unnecessary to hear extensive argument on that point. I continue to be of the view that if the matter had depended solely on the question of delay I would not have refused permission.
  42. (Court was addressed on the matter of costs)

    Ruling on costs

  43. MR JUSTICE SALES: Various costs applications are made for Crest to pay costs additional to the Secretary of State's costs.
  44. First of all, the Environment Agency makes two applications for costs. It applies for an order that Crest pay the costs of it preparing and putting in an acknowledgement of service. Mr Hart, for Crest, does not dispute that such an order should be made. Accordingly, I make it.
  45. Secondly, the Environment Agency apply for their costs of the application and the hearing. I dismiss that application. In my view none of the points referred to by the Environment Agency take this case outside the ordinary rules set out in Bolton that ordinarily an unsuccessful claimant should only have to pay one set of costs. The Environment Agency may have had particular interest in the outcome of the case but the fact is that the Secretary of State covered all the relevant legal argument. There is nothing in the Environment Agency's position which takes it outside the ordinary rule.
  46. Thames Water makes three applications for costs. First of all, it applies for its costs for putting in an acknowledgement of service. It has put in a schedule of such costs for summary assessment. Mr Hart, for Crest, accepts both that an order should be made in principle and in the sum of the summary assessment. Accordingly, in relation to that application, I order Crest to pay £4,096.88 in respect of Thames Water's costs of preparing and putting in its acknowledgement of service.
  47. Secondly, Thames Water applies for its costs in relation to an application for expedition in this case. That is resisted by Mr Hart. In my view it is right that Crest should pay this element of Thames Water's costs. Thames Water had a strong interest in having the issues resolved promptly. It was reasonable and proportionate for it to make an application which was required to be made in order to achieve expedition. It was successful in that application, since Mr Justice Ouseley directed expedition. Accordingly, it seems to me that these were costs reasonably incurred by Thames Water which ought to be paid by Crest, and I so order.
  48. There is no schedule for summary assessment of these costs so the order in relation to this element will be for Crest to pay Thames Water's costs in relation to this application to seek expedition on the standard basis, to be assessed if not agreed.
  49. The third application by Thames Water is for payment of its costs of the claim and the hearing. It is said that Thames Water had a particular interest of the outcome of the case and that justifies the court in making a costs order in its favour against Crest. In my view - essentially for the same reasons as given in relation to the Environment Agency - there is nothing in relation to Thames Water's position which takes this case outside the usual rule set out in Bolton. All the relevant arguments were deployed by the Secretary of State, and I see no justification why Crest should pay a further set of costs. Accordingly, that application is refused.
  50. Turning to Veolia: it makes an application for Crest to pay its costs of preparing and putting in the acknowledgement of service. A schedule of costs is put in. A summary assessment is asked for. Mr Hart, for Crest, accepts both that a costs order should, in principle, be made and that it should be made in the sum set out in the schedule. Accordingly, I order Crest to pay Veolia's costs of preparing and putting in its acknowledgement of service assessed in the sum of £8,642.25.
  51. Finally Redland make an application for their costs of preparing and putting in an acknowledgement of service, as yet another interested party. They do not have a schedule of costs for summary assessment. Mr Hart accepts that Crest should be ordered to pay Redland's costs of preparing and putting in an acknowledgement of service, and so I order that such costs be on the standard basis to be assessed if not agreed.
  52. (Court was addressed as to arguments in second matter)


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