1. EUETS Challenge

At the end of 2013, annual allocations of allowances for Phase III of the EU Emissions Trading Scheme (2013-2020) were finalised. In respect of the amount of allowances which are to be issued free of charge (as opposed to being purchased) these amounts were reduced by the European Commission applying the “cross-sectoral correction factor” under Article 10a(5) of the EU Emissions Trading Directive 2003/87/EC. Effectively the maximum quantity of free allowances was reduced across the board for all installations qualifying for free allowances within the EU. This has very significant financial implications especially for energy-intensive industries facing serious competition from installations outside the EU. A number of operators of installations within the UK and indeed other Member States have been considering the lawfulness of the Commission’s Decision applying the correction factor, and are now challenging that decision in national courts with a view to the issues being referred to the CJEU. The argument is essentially that the Commission has misapplied Article 10a(5) by excluding, from the process of calculating the maximum quantity of free allowances, emissions from installations using waste gases to generate electricity or operating district heating or high efficiency cogeneration, all of which should be eligible for free allowances. 

Judicial review proceedings have been issued in the Administrative Court by Total UK, and it is understood by other operators affected.

  1. Sewerage discharges case to be heard by Supreme Court

The ability of sewerage undertakers to discharge sewage into canals or other watercourses has been the subject of legal controversy for many years. In the case of Durrant v Branksome Urban District Council [1897] 2 Ch. 291 the Court of Appeal had held that under the Public Health Act 1875 sewerage authorities had an implied statutory right to make such discharges. Then in 2001, in British Waterways Board v. Severn Trent Water [2002] Ch 25, the Court of Appeal held that under legislation following the privatization of the water industry there was no such implied right. More recently a dispute has arisen between United Utilities and the owners of the Manchester Ship Canal and Bridgewater Canal. UU claim that the pre-privatisation implied right was carried through under the transfer process to the privatized sewerage undertakers. This argument was successful at first instance but not in the Court of Appeal, though two Lords Justices commented in terms casting doubt on the correctness of the 2001 Court of Appeal decision in British Waterways Board. The appeal by UU will be heard by the Supreme Court over three days from 6-8 May. The importance of the case is shown by the fact that the Supreme Court has given permission to intervene to the Canal & River Trust, which is the successor to BWB, and also to a body of drainage commissioners and to Anglian Water, since it also has implications for discharge of sewage into land drainage infrastructure.

  1. Costs Protection in nuisance claims

The Court of Appeal decision in Barr v. Biffa  Waste Services Limited [2012] EWCA Civ 312 was of landmark importance in the law of nuisance. The Court of Appeal held that it was not a defence to a claim for nuisance to show that waste disposal activities giving rise to a nuisance were carried out in accordance with a landfill permit and without negligence (see the March 2012 issue of this newsletter for coverage of the case). In overturning the judgment of Coulson J in favour of Biffa, the Court of Appeal remitted the case to Coulson J for re-hearing. The re-hearing will take place from 7-10 April in the TCC.

In another group claim in nuisance in Anslow v. Norton Aluminium Limited [2012] EWHC 2610 the claimants were successful in their claim for damages for odour nuisance from a Midlands aluminium foundry. The overall damages are put at about £1.2 million. The result was that the defendant company became insolvent, was put into administration immediately before judgment was handed down, and the business was sold in a pre-pack administration. Proceedings were then commenced for a personal costs order against the managing director of the company. The Claimants’ costs exceed £7 million. No order for costs was made at the time of judgment, since on the law at that point, such costs were not a provable debt in the administration. The decision of the Supreme Court in Re the Nortel Companies [2013] UKSC 52 has since however reversed that position, and the process of seeking costs continues. The case illustrates the potentially huge financial consequences of a hard-contested group action in nuisance.

Barr and Anslow were CFA cases brought under the regime prior to the changes brought about under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, by which success fees were limited and the ability to recover after the event insurance premiums from an unsuccessful defendant was removed. These changes follow the recommendation of Lord Justice Jackson, but do raise the question of whether proceedings in private nuisance are in many such cases prohibitively expensive, contrary to the UNECE Aarhus Convention on Access to Justice, Article 9. This raises the fundamental question of whether that Convention applies to private nuisance proceedings, and if so its implications for cost protection.

This has led to two complaints to the Aarhus Compliance Committee which are pending and which it is understood will be considered by the Committee at its meeting on 25-28 March. One complaint is by the Environmental Law Foundation (ELF) (Complaint ACCC/C/2013/85) and relates to the effect of s. 46 LASPOA in removing the ability to recover ATE insurance premiums. The other is by Mrs Alyson Austin, a resident near a major open cast and landfill scheme in South Wales, (Complaint ACCC/C/2013/86) who argues that her own difficulties in pursuing claims for costs protection in intended private nuisance proceedings is an example of a systemic failure in respect of Article 9. The UK is contesting both complaints.

Mrs Austin applied in 2013 for full costs protection for a proposed private nuisance action against the opencast operator, Miller Austin. Her application was dismissed in the High Court in Cardiff but permission was given to appeal and the case will be heard by the Court of Appeal on 25/26 June, and should raise squarely the issue of how Article 9 applies to private nuisance claims.