Avril Smith, solicitor, Lawrence Graham
Facing the consequences
The Corby birth defects scandal underlines landlords’ environmental liabilities
Corby Council was recently found to have been negligent in the way that it dismantled a steel plant, in a case brought by claimants who said that their birth defects had been caused by the resultant toxic waste.
Does this case have any relevance for housing associations?
Yes, to those housing associations that have, in the past 20 years, taken transfer of a significant portion of housing land from local authorities through the large-scale voluntary transfer programme. There are questions over whether such a housing association would be liable in case of contamination.
Local authorities typically grant environmental warranties in the transfer documentation. Such warranties require local authorities to update their contaminated land strategies and investigate whether any contamination is present.
What is does the contaminated land register do?
The Environmental Protection Act 1990 places a duty upon each council to inspect its area from time to time, to identify contaminated land. It is questionable what that means and experience indicates that inspection of housing land or remediation is usually driven by an application for redevelopment. Developers will expect an up-to-date register and enough environmental information to make an informed commercial decision.
Where transferred land is found to be contaminated, who is responsible?
A remediation notice requiring a clean-up of the land must be served on those persons who have ‘caused or knowingly permitted’ contaminating substances present on the property. They may either be the original polluters and/or subsequent owners (or tenants of leases granted for 21 years or more), where they had sufficient knowledge of the contamination or the ability to prevent it.
Is it possible for liability to fall on a housing association?
The council is unlikely to be able to identify the original polluters of the land, particularly if it was caused by defunct industries. If the council did not have actual or constructive knowledge of the contamination during its period of ownership or occupation and the original polluters cannot be found, the council may serve a remediation notice on the transferee housing association as current owner, if it is thought to have sufficient knowledge.
A council can elect to bear the costs for remediation where this expense places the housing association in financial difficulties and jeopardises the provision of social housing. Alternatively, the two parties could split the costs. It is very important for a council or housing association to be aware of their position with regard to environmental issues and allocation of liability or risk in any general property transfer or LSVT documentation.
How can local authorities and housing associations protect themselves?
Environmental insurance offers good coverage and protection to local authorities with regard to LSVTs. The difficulty with obtaining land contamination insurance is that there are typically exclusions in the policies restricting development and any change of use. This means environmental insurance is unlikely to cover land that has been developed after transfer or no longer used for social housing, but it is a stop-gap solution where parties are unable to agree on the allocation of environmental liabilities.
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