In a recent High Court case, Wicklow County Council v Fenton, one of the issues considered was whether, in civil proceedings brought by a regulatory authority under the Waste Management Act 1996, the directors of a company held responsible for pollution caused by unauthorized dumping could be fixed with personal liability in addition to the company - that is, whether the corporate veil could be pierced. The High Court held that the corporate veil can indeed be pierced in order to give full effect to the 'polluter pays' principle.
Wicklow County Council sought orders under Sections 57 and 58 of the Waste Management Act 1996 directing a landowner, a waste company and the waste company directors to carry out all works necessary to reinstate land contaminated by reason of unauthorized landfilling activity. The landfilling in question involved nearly 8,000 tonnes of waste, including hazardous clinical waste.
After a finding of liability against the waste company, one of the issues argued was that of the personal liability of the waste company directors. The company directors argued that no order should be made against them personally, because it was the company that carried out all relevant operations. The directors relied on a line of planning/land-use case law, including Dun Laoghaire Corporation v Parkhill Developments Limited (1989) and Dublin County Council v O'Riordan (1985), which established that directors of companies engaged in planning and development activities would not become personally liable in the absence of fraud or siphoning of money from the company so as to leave it unable to fulfil its obligations. However, the judge refused to follow those decisions, noting that they were based on the courts' view that it was up to the planning authority, when granting development consent to development companies, to ensure by the imposition of appropriate conditions that there was sufficient security or other guarantees to ensure completion of developments. The judge also noted that the planning and land use code in Ireland was not enacted to transpose European directives into domestic law, whereas the Waste Management Act 1996, under which Wicklow County Council sought orders in the Fenton Case, was enacted to give effect to European waste directives. The judge noted that the EU recommendation which deals with the 'polluter pays' principle (Council Recommendation 75/436/Euratom, ECSC, EEC of March 3 1975) defines a 'polluter' as "someone who directly or indirectly damages the environment or who creates conditions leading to such damage".
On the evidence in Fenton, the judge found it could not be said of the directors that they did not, at least indirectly, create conditions leading to damage to the environment. The judge held that the domestic law in relation to limited liability of companies would frustrate or fail fully to implement the objectives of the relevant waste directives if it precluded the making of an order against directors in circumstances where the company in question, having been first directed by the court to comply with the orders, was not in a position, for financial or other reasons, to do so. The court must be in a position to make orders directly against directors in such circumstances; and the domestic company law of limited liability should be suspended and the corporate veil pierced in order to ensure full application of the 'polluter pays' principle and other objectives of European waste directives. To hold otherwise, the judge stated, would mean that innocent parties (local authorities or the public) would have to pay. Accordingly, he found it was appropriate to make a 'fall-back' order against the individual directors of the waste company.
This case illustrates the increasing importance of the 'polluter pays' principle in Irish waste management law.
In the sphere of criminal offences under the Waste Management Act 1996, it is arguably easier for the court to pierce the corporate veil because there is a specific statutory basis for doing so. In the area of civil proceedings by a regulatory authority (eg, where a waste authority seeks the civil remedies of injunction, or orders of reinstatement or clean-up cost orders, against the responsible party), there is no specific statutory basis for piercing the corporate veil, but in Fenton the High Court relied on the 'polluter pays' principle in order to do so. In all areas of law the Irish courts have traditionally been reluctant to undermine the protection provided by limited corporate liability unless there was a clear basis for doing so, but the Fenton decision illustrates the important status which the 'polluter pays' principle has now achieved in Irish waste management law.
For further information on this topic please contact Conor Linehan at William Fry by telephone (+353 1 6395397) or by fax (+353 1 6395333) or by email ([email protected]).