Contaminated Land: updated guidance

The first update in almost four years of the Law Society’s guidance on contaminated land has been published. This an important update for commercial property lawyers and others, incorporating the latest regulations and statutory guidance (including the new radioactive statutory guidance in 2018 for England).

The guidance is aimed at helping all solicitors involved in property transactions to understand what specialist information and assistance clients may need if a contaminated land issue arises.

Land is “contaminated land” for legal purposes under Part 2A of the Environmental Protection Act 1990 if it poses an unacceptable level of risk; and has been formally identified as contaminated land by the local authority. However, land could still be physically contaminated even though not “contaminated land” under Part 2A.

Contamination of land in England and Wales may arise by virtue of natural contaminants within the soil, though as the practice note says, any risk posed is usually very low.

Unsurprisingly, the most common causes of land contamination are commercial and industrial activity which can pose a risk to public health and or the environment. Of even greater concern is the unacceptable level of risk from land such as former landfill or industrial sites.

Derelict land could also be contaminated. According to ForestResearch, there is an estimated 20,000 hectares of contaminated land in the UK, with much of it currently left derelict or underused. And there have been calls for an increase in development on derelict land, rather than develop greenfield sites such as parks or woodland, to provide the new homes that are desperately needed.

However, because of the risk of contamination land, when it is redeveloped, contamination must be a material consideration at the early planning stages.

The Society’s guidance sets out a useful summary of the existing framework, reminding practitioners that the contaminated land regime:

  • applies to all land, as well as controlled waters' (surface, ground and coastal waters); and
  • can affect current and historic owners, occupiers, developers, lenders and those responsible for any potentially contaminating activities carried out on the land.

There are changes in relation to the regime for radioactive contaminated land. But radioactive contaminated land will rarely be an issue, but an awareness of the regime is expected.

Reflecting the different levels of contamination risk outlined, the guidance presents a “broadly risk-based” approach to contaminated land. This means practitioners are expected to consider the level of risk before deciding what enquiries and investigations (if any) need to be made and what other advice clients will need.

Liability

It is vital to understand on whom primary liability for contaminated land falls when acting in a transaction involving commercial property. Those who cause or knowingly permit a contaminant to be in, on or under the land have primary liability for remediation.

The identity of the individual or entity liable may not be apparent or easily found. Even a buyer itself can be held liable. The guidance states, for example, that in some situations, a buyer of land that is contaminated may be determined to be a class A person if the buyer knows that the land is contaminated and fails to remediate it after a reasonable opportunity to do so.

Furthermore, a buyer could inherit the seller’s liability for contaminated land if, for instance, the seller – who was primarily liable - pays the buyer a sum of money or reduces the purchase price on the basis that the buyer carries out the remediation work. In those circumstances, the buyer could end up with a double liability – the previous owner’s liability together with its own liability if it continued to permit the land to be contaminated.

Practical issues

The guidance sets out best practice when dealing with the conveyancing, beginning with the results of the CON29 enquiry as to whether the land is designated as contaminated by the local authority. Remember that a negative response does not mean the land is not contaminated.

It also covers the issues relating to remediation notices and unresolved issues that may require you to advise your client to pull out of the transaction.

It is also important to bear in mind issues that could arise in a specific type of transaction. For example, in the case of leases (do the usual repair, service charge and statutory compliance obligations transfer remediation liability or cost from the landlord to the tenant?); and if a lender is involved, do you need to seek further instructions if there is a contaminated land issue?

Breaches

A reminder of the consequences of a breach of environmental law is always timely. On conviction of a breach of most environmental laws (ie. the unauthorised or harmful deposit of waste, illegal discharges to air, land and water), an individual or a company could face an unlimited fine and/or six months' imprisonment (five years in the higher courts).

In the case of corporate breaches, company directors and officers can face prosecution if the criminal offence was committed with their consent or connivance, or was attributable to their neglect.

Thames Water was a high-profile case in which the company was slapped with the biggest ever fine for environmental breaches (£20.3m) following a series of incidents where untreated sewage was pumped into the Thames river.

Commercial property practitioners have a clear duty to their clients. They must exercise due diligence and ensure they properly advise any clients owning, or considering buying or leasing commercial property in relation to potential contaminated land issues. If they fail to adequately protect their interests they could face a negligence claim.

The Law Society’s practice note, available here, will be invaluable for practitioners in exercising the required due diligence.

 

 

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