The recent Judgment of the Court of Appeal in the case of Barr & Ors –v- Biffa Waste Services Limited  EWCA Civ 312 highlights the difficulties faced by businesses operating close to residential housing or other sensitive sites. In particular, food and drink manufacturers whose operations have the potential for off-site impact (e.g. odours, noise) should take note.
Biffa operates a waste disposal site near to a local housing estate. Problems started in 2004 when the site started accepting pre-treated waste. Complaints began within a week and the site was prosecuted by the Environment Agency in 2005. Problems continued, eventually culminating in a group action claim for odour nuisance, brought by 152 local households in 2011. The residents initially claimed compensation for disturbance and an injunction to prevent further alleged nuisance. However, the situation had improved sufficiently by the court case, so an injunction was not needed.
Biffa defended the case. The Judge commenting that it was somewhat of a test case for Biffa, given its other sites. Biffa successfully argued in the lower court that it should not be liable under the current tests for private nuisance – when it had been complying with its permit and it had not been negligent. Compliance was evidence that it was acting reasonably, and so any inevitable disturbance was not actionable. Biffa argued that the availability of private remedies should take into account the strict statutory regime in which it operates (in relation to environmental and waste controls). The Judge was sympathetic to these arguments. He determined that nuisance claims should “march in step with” the modern system of regulatory controls.
Unfortunately for Biffa, the Court of Appeal disagreed. Lord Justice Carnwarth commented that this was a simple dispute based on settled principles of law. There is no requirement for a claimant to prove breach of a statutory permit or negligence. “If there is a problem…within the existing legal framework, its solution must rest with the legislature.”
So where does this leave businesses? The previously established principles of nuisance claims still apply. If a defendant can show it is a “reasonable user” of its land, then it will not be liable – but compliance with an environmental permit or other statutory controls is not sufficient to show it is a reasonable user. If the defendant is not a “reasonable user” then it will be liable for foreseeable harm, even if it has exercised reasonable skill and care to avoid it.
Strategically, these claims must be carefully managed. Individually, a private nuisance claim will usually attract modest damages, but collectively they can become more substantial if the dispute grows to include a large group of claimants. Legal costs can also become significant. In the Biffa case, damages for the 30 test case households is thought to be in the tens of thousands – whereas each side has now incurred approximately £3 million pounds each in legal costs taking the case to the Court of Appeal. In addition, currently claimant law firms typically operate under a Conditional Fee Arrangement (CFA), which includes a success fee should a favourable outcome be obtained. After The Event (ATE) insurance policies are also commonly purchased by claimants and these premiums are currently recoverable from defendants. Whilst the recoverability of success fees and ATE premiums from defendants is subject to change in the future, costs can quickly become a key factor in the resolution of such claims.
However, there is much that a business can do to manage the risk of such claims arising. In our experience, proactive early management can go a long way to diffusing neighbours’ concerns and so avoid issues escalating. Working with residents to understand their concerns, holding residents’ meetings, and following up on issues identified, when done appropriately can go a long way to manage matters. In addition, careful document management is a good example of where early control is beneficial. We have seen examples of wide disclosure of material to the Environment Agency – which has subsequently been obtained by claimant law firms under Environmental Information Regulations and then used to launch a civil claim. Complaints therefore need to be on the radar of EHS managers and in-house lawyers in order to avoid issues developing. The message is simple: if a prosecution or civil claim is on the horizon, early strategic management is essential.